Deutsche Bank: New orientation for European economic policy?
November 12, 2012
The autumn forecast released by the European Commission on November 7 is more than simply a collection of numbers. It will also influence the economic policy agenda in the EU and the eurozone. France remains a source of concern.
The autumn forecast paints a mixed picture: the position of the countries stricken by the euro crisis has deteriorated versus the spring forecast.
In the context of running down their budget deficits most of the euro countries have lost ground. While the outlook for Greece has improved at a low level, the forecasts for consolidation achievements in Spain, Italy and Portugal have been revised to the downside. All these readings are a long way away from the Maastricht target (3% of GDP).
The reduction of current account imbalances is also proceeding more slowly than anticipated six months ago. The respective surpluses and deficits for 2012 have widened in comparison with the spring forecast.
Last but not least, the labour market situation continues to worsen: the Commission now reports higher unemployment rates for Greece, Ireland, Portugal, Italy and Cyprus. All these countries have double-digit unemployment rates – Spain is stabilising at over 24%.
To see the full note by Nicolaus Heinen from DB Research please proceed to the research section of EU.Cbonds.