EU economic confidence strengthens whilst Trump’s economics revealed

Two topics attract a wide media attention today: the consequences of President Trump’s economic policy on the one hand and Eurostat’s latest economic confidence report on the other hand.

In an interview granted to Bild Zeitung, Federal Minister for Economic Affairs Brigitte Zypries talks about the planned economic policies of the new US administration and its influence on German economy. Ms Zypries notes that US isolation would be bad not only for the German economy, but also for the job market, urging the Federal Government to negotiate with President Trump. She further adds that Mr Trump’s isolationist policies put the US economy at a disadvantage, according to some articles including Bild Zeitung, Frankfurter Allgemeine Zeitung, Handelsblatt and Dagens Industri.

Discussing ECB policy, José Ramón Pin comments on Cadena Cope about the risks taken by Mario Draghi, saying he “is bogged down” in the ECB’s stimulus plan and will have to raise interest rates eventually. Spanish Finance Minister Luis de Guindos is reportedly very concerned about a hike in the ECB rates. In Handelsblatt, authors address the increasing inflation in the euro area. The ECB stability goals are close, they report. Now, Draghi is forced to rethink his loose monetary policy. Chief economist at DZ Bank, Stefan Bielmeier, demanded that the ECB “quickly start a discussion about the end of low interests”. Also Belgian savers are the most penalised by the low interest rate monetary policy, reports La Libre Belgique.

Many papers also report that eurozone economic confidence strengthened for a fifth consecutive month in January, to the highest level in nearly six years and this despite concerns regarding the Italian banking sector and Greek debt. CoMedia in Greece, France and Poland continue to report on the ongoing debate on Greek economic crisis. The European Commission is trying to calm the mood in the European Union regarding Greek debt, PR1 radio station reports. In his speech before the European Parliament about the European Semester, Commissioner Moscovici said that “Greece is at the heart of the Eurozone”, report Greek media.

Philip Aldrick also writes in The Times that the eurozone has ‘bounced back to life’ as growth surged throughout the single currency at its best pace since 2015, with inflation coming close to target and unemployment rates dropping to a seven-year low. Werner Mussler notes in an opinion piece in Frankfurter Allgemeine Zeitung, that the state of the eurozone has not been discussed lately due to the many global and European crises. However, it is far from “ideal,” Mussler states regarding the ECB’s suggestions for European Safe Bonds and ailing Italian banks which could be communised.

In an interview granted to L’Opinion, Natixis’s Chief Economist Patrick Artus explains that “the only way for Europe to save itself, is to do more in a non-bureaucratic manner”. Nevertheless, as Catherine Chatignoux writes in Les Echos, the eurozone’s growth at 1.7% surpassed the US one. It is the first time this happens since 2008. Indeed, in the last quarter of 2016, compared with the previous quarter, the eurozone economy grew by 0.5%.

Yet financial analyst Călin Rechea analyses in an editorial in Bursa that the first month of 2017 represented an unpleasant surprise for the European Central Bank, given that inflation grew beyond expectations in the eurozone and in the biggest economies of the region, while the unemployment rate remains at extremely high levels, except for Germany. The preliminary information for January 2017, regarding the increase in consumer prices, indicates 3% inflation rate in Spain, 1.4% in France, 1.9% in Germany, and 1.8% for the entire eurozone.

Considering the UK’s economy, Tom Knowles reports in The Times, that the UK’s economy is expected to grow faster than that of the eurozone and will be beaten only by that of the United States out of the G7 nations this year.

Parallel to Eurostat’s release on Eurozone’s economic growth, some European media link these good results with unemployment figures. Euro area seasonally-adjusted unemployment rate was 9.6% in December 2016, down from 9.7% in November 2016 and down from 10.5% in December 2015. This is the lowest rate recorded in the euro area since May 2009. While Czech Republic has lowest jobless rate in EU, Greece is the “champion” of unemployment in Europe with a rate of 23%, far behind Spain, where unemployment has dropped to 18.4%.