How the world sees Greece
How Greek Financial Crisis Is Bringing Out The Good In People Huffington Post While the Greek economy survives on rescue loans, the unemployment rate hovers around 26 percent, and the public sector protests against the government's austerity measures, Greek citizens are coming together to turn their country around. Many Greeks ... |
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| READ THE ORIGINAL POST AT www.huffingtonpost.com |
Supporters of excessive austerity have made overcoming the eurozone crisis more difficult and costly
The eurozone had been contracting for eighteen months since the second half of 2011. Though recent news is better, the European Central Bank projects Eurozone GDP will decline by 0.6% in 2013. The UK economy is not doing much better in terms of economic growth. Future growth is further threatened by the sharp fall in investment, especially pronounced in the UK and Southern Europe.
Eurozone unemployment is horrendously high at over 19 million people, and a rate of 12%. In Spain and Greece unemployment is over 26% and youth unemployment over 50%. In the whole of the EU, 26 million people are unemployed.
"Austerians" have argued that the policies followed were necessary to reduce the debt overhang. However, the ratio of debt to GDP has risen in all EU regions since 2008, and especially in the UK and the eurozone periphery where austerity has been practised most rigorously. Due to bad economic analysis and worse arithmetic, supporters of excessive austerity have made overcoming both the crisis of debt and of growth more difficult and costly.
Are there alternatives to achieve quick recovery of growth and employment? Clearly yes! In Germany, the government should encourage higher wages which would boost consumption , and encourage higher imports from the rest of Europe. Wages recently started to increase In Germany, but too slowly. It is surprising that Germany, an advanced economy, has no minimum wage policy. Encouragingly both the Social Democrats (SPD) and the Greens are proposing a minimum wage policy.
Fiscal consolidation in Germany is being adopted far too quickly at the federal and state levels. Particularly harmful is the policy that in the states (Länder) no new public debt is allowed from 2020. Ideally this policy should be modified. If this is not possible, then consolidation should be achieved by increasing taxes to maintain – or increase - investment in sectors like green infrastructure. Recent modelling shows such investment would encourage growth and employment in Germany and the rest of Europe.
The case for slower fiscal consolidation in the UK is also extremely clear. Bagaria, Holland and Van Reenen at the National Institute have shown that if fiscal consolidation in the UK was postponed till growth was restored, aggregate GDP would be at a significantly higher level by 2021 than with the current excessive austerity policies. The reason is that too early fiscal austerity is particularly inappropriate, as the IMF has emphasised, when fiscal multipliers are very high during or after crises and private bank lending is insufficient due to risk aversion. Again, higher UK growth would boost, via trade, growth in the rest of Europe, replacing vicious circles with virtuous ones.
The pace of fiscal consolidation needs to also be reduced in the European periphery countries. The troika should allow slower fiscal consolidation, and support measures to encourage growth and employment, via financing economically viable projects. Most urgent is the case of Greece, where GDP has fallen by a quarter.
Though national measures are clearly important, more needs to be done at European level. The doubling of the paid-in capital of the European Investment Bank, Europe's public development bank, was a visionary act by EU leaders. But till now it has not been sufficiently used. Indeed it was counter-productive that EIB lending actually fell in 2012, when private bank lending was falling in much of the EU. It is important that EIB lending increases rapidly. EIB lending to small and medium enterprises is growing quite substantially; this has to be further expanded as SMEs are an important source of employment. It needs to be complemented by the EIB increasing financing of investment in decentralised projects, such as those that foster innovation and increase energy efficiency.
It is particularly effective if EIB loans are co-financed by national development banks, as this will increase the multiplier effect of EIB loans, and leverage national public resources. Germany has a large, effective and profitable development bank – KfW. France just created a public development bank; the Labour party is proposing a British investment bank to fund both infrastructure and SMEs. Crisis-hit countries like Greece and Ireland also urgently need to create national development banks. The EU budget needs to be restructured to increase the proportion going to investment and growth. Particular emphasis should be placed on measures to increase youth employment immediately.
There are clear policies to create growth, jobs and hope in Europe. All we need is for politicians and policymakers to have the vision and courage to pursue them.
• Professor Stephany Griffith Jones is financial markets programme director at the Initiative for Policy Dialogue at Columbia University
• Matthias Kollatz is former vice president of the European Investment Bank
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| READ THE ORIGINAL POST AT www.theguardian.com |
How Greek Financial Crisis Is Bringing Out The Good In People Huffington Post While the Greek economy survives on rescue loans, the unemployment rate hovers around 26 percent, and the public sector protests against the government's austerity measures, Greek citizens are coming together to turn their country around. Many Greeks ... |
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| READ THE ORIGINAL POST AT www.huffingtonpost.com |
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| READ THE ORIGINAL POST AT www.greekherald.com |
Supporters of excessive austerity have made overcoming both the eurozone crisis more difficult and costly
The eurozone had been contracting for eighteen months since the second half of 2011. Though recent news is better, the European Central Bank projects Eurozone GDP will decline by 0.6% in 2013. The UK economy is not doing much better in terms of economic growth. Future growth is further threatened by the sharp fall in investment, especially pronounced in the UK and Southern Europe.
Eurozone unemployment is horrendously high at over 19 million people, and a rate of 12%. In Spain and Greece unemployment is over 26% and youth unemployment over 50%. In the whole of the EU, 26 million people are unemployed.
"Austerians" have argued that the policies followed were necessary to reduce the debt overhang. However, the ratio of debt to GDP has risen in all EU regions since 2008, and especially in the UK and the eurozone periphery where austerity has been practised most rigorously. Due to bad economic analysis and worse arithmetic, supporters of excessive austerity have made overcoming both the crisis of debt and of growth more difficult and costly.
Are there alternatives to achieve quick recovery of growth and employment? Clearly yes! In Germany, the government should encourage higher wages which would boost consumption , and encourage higher imports from the rest of Europe. Wages recently started to increase In Germany, but too slowly. It is surprising that Germany, an advanced economy, has no minimum wage policy. Encouragingly both the Social Democrats (SPD) and the Greens are proposing a minimum wage policy.
Fiscal consolidation in Germany is being adopted far too quickly at the federal and state levels. Particularly harmful is the policy that in the states (Länder) no new public debt is allowed from 2020. Ideally this policy should be modified. If this is not possible, then consolidation should be achieved by increasing taxes to maintain – or increase - investment in sectors like green infrastructure. Recent modelling shows such investment would encourage growth and employment in Germany and the rest of Europe.
The case for slower fiscal consolidation in the UK is also extremely clear. Bagaria, Holland and Van Reenen at the National Institute have shown that if fiscal consolidation in the UK was postponed till growth was restored, aggregate GDP would be at a significantly higher level by 2021 than with the current excessive austerity policies. The reason is that too early fiscal austerity is particularly inappropriate, as the IMF has emphasised, when fiscal multipliers are very high during or after crises and private bank lending is insufficient due to risk aversion. Again, higher UK growth would boost, via trade, growth in the rest of Europe, replacing vicious circles with virtuous ones.
The pace of fiscal consolidation needs to also be reduced in the European periphery countries. The troika should allow slower fiscal consolidation, and support measures to encourage growth and employment, via financing economically viable projects. Most urgent is the case of Greece, where GDP has fallen by a quarter.
Though national measures are clearly important, more needs to be done at European level. The doubling of the paid-in capital of the European Investment Bank, Europe's public development bank, was a visionary act by EU leaders. But till now it has not been sufficiently used. Indeed it was counter-productive that EIB lending actually fell in 2012, when private bank lending was falling in much of the EU. It is important that EIB lending increases rapidly. EIB lending to small and medium enterprises is growing quite substantially; this has to be further expanded as SMEs are an important source of employment. It needs to be complemented by the EIB increasing financing of investment in decentralised projects, such as those that foster innovation and increase energy efficiency.
It is particularly effective if EIB loans are co-financed by national development banks, as this will increase the multiplier effect of EIB loans, and leverage national public resources. Germany has a large, effective and profitable development bank – KfW. France just created a public development bank; the Labour party is proposing a British investment bank to fund both infrastructure and SMEs. Crisis-hit countries like Greece and Ireland also urgently need to create national development banks. The EU budget needs to be restructured to increase the proportion going to investment and growth. Particular emphasis should be placed on measures to increase youth employment immediately.
There are clear policies to create growth, jobs and hope in Europe. All we need is for politicians and policymakers to have the vision and courage to pursue them.
• Professor Stephany Griffith Jones is financial markets programme director at the Initiative for Policy Dialogue at Columbia University
• Matthias Kollatz is former vice president of the European Investment Bank
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| READ THE ORIGINAL POST AT www.theguardian.com |
What Is It Like to Be Greek? Greek Reporter keep-calm-and-go-greek-23 Over the last few years, so many controversial things have been heard of poverty-stricken Greece since the economic crisis broke out. Rise in the unemployment rate, in social inequalities as the rich got somehow richer and the ... |
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| READ THE ORIGINAL POST AT greece.greekreporter.com |
The eurozone recovery can be traced back to the ECB becoming a lender of last resort and to a relaxation of austerity policies
Finally, the recession in the eurozone is over: for the first time for almost two years, the region's GDP has grown again in the second quarter of this year. What is more, leading indicators point to a continuing recovery through the summer and autumn, albeit at a rather muted speed.
While German politicians in particular are now claiming that the recovery is a result of "consistent stability-oriented policy", closer scrutiny shows that this claim is not very plausible. Instead, the turnaround can be directly traced back to a reversal in two important areas of macroeconomic policymaking. First, Mario Draghi's decision from the summer of 2012 to make the European Central Bank to a de facto lender-of-last resort for embattled government. Second, the gradual relaxation of austerity policies in the euro area.
Since the onset of the euro crisis in 2010, policymakers have tried in vain to end it. Neither the establishment of the temporary European Financial Stability Facility nor the permanent European Stability Mechanism, both endowed with several hundred billion euros in lending capacities, managed to calm the markets.
The passage of both harsh austerity packages and the fiscal compact – which forces eurozone countries to limit structural budget deficits to 0.5% of GDP – have left financial markets completely unimpressed. Instead, after each new policy measure brought forward by the finance ministers, interest rates on bonds of southern European countries such as Spain and Italy continued to climb and the region's economies slid deeper into recession.
Mario Draghi has been much maligned in the European press, and in Germany in particular, where he has been branded "Draghiavelli". But only when he publicly stated last summer that the ECB would do "whatever it takes" to save the euro, announcing that the central bank would be willing to buy government bonds under the newly created Outright Monetary Transactions programme, did spreads between yields on periphery bonds and German bonds start to fall.
This fall in government spreads did not only benefit the treasuries of the embattled crisis countries. Since interest rates corporations have to pay follow closely that of their government, the reduction in spreads has also led to a relaxation of credit conditions for the private sector in the periphery countries. With the standard lag of interest rates influencing the real economy, the improvement in credit conditions can now be seen in economic activity.
Second, the breakneck austerity course Europe had embarked on in 2010 is slowly coming to an end. While this policy change did not attract as much public attention as Draghi's words and actions, it is no less real. As even the IMF has now acknowledged that austerity did not work quite as well as it originally believed, crisis and non-crisis countries across the continent have been given more time to get their fiscal balances in order.
According to the most recent forecast of the European commission, the structural budget deficit in the euro area has been reduced by 3.7% of GDP between 2010 and 2013. Yet, from 2013, no further tightening of fiscal policy is predicted. Instead, the structural budget deficits are expected to remain at roughly 1.5% of GDP over the coming year. Italy, Spain, France; in each of these countries, austerity measures are now pushed into the future not to derail the business cycle further.
And, what is more important, contrary to its attitude over the past years, the austerity preaching German finance ministry has quietly accepted these adjustments. The combination of lower interest rates and a slower path of fiscal tightening has done exactly what standard textbook models would predict: it has given the economy more breathing space and the private sector activity is now recovering.
Is, then, all well now? Unfortunately not. So far, this is not a self-sustaining recovery with strongly growing private investment, disposable income, falling unemployment and growing consumption. The crisis can still re-emerge like a monster from a B-movie. A new failure of governments in countries such as Italy and Spain might again spook the markets.
An adverse ruling by the German constitutional court on OMT (a case is to be decided this autumn) could also create new uncertainty and send spreads up again. Draghi might then still come to a rescue by actually implementing OMT and start buying bonds but, in the process, the recovery can easily be derailed.
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| READ THE ORIGINAL POST AT www.theguardian.com |
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| READ THE ORIGINAL POST AT www.greekherald.com |
What Is It Like to Be Greek? Greek Reporter keep-calm-and-go-greek-23 Over the last few years, so many controversial things have been heard of poverty-stricken Greece since the economic crisis broke out. Rise in the unemployment rate, in social inequalities as the rich got somehow richer and the ... |
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| READ THE ORIGINAL POST AT greece.greekreporter.com |
The eurozone recovery can be traced back to the ECB becoming a lender of last resort and to a relaxation of austerity policies
Finally, the recession in the eurozone is over: for the first time for almost two years, the region's GDP has grown again in the second quarter of this year. What is more, leading indicators point to a continuing recovery through the summer and autumn, albeit at a rather muted speed.
While German politicians in particular are now claiming that the recovery is a result of "consistent stability-oriented policy", closer scrutiny shows that this claim is not very plausible. Instead, the turnaround can be directly traced back to a reversal in two important areas of macroeconomic policymaking. First, Mario Draghi's decision from the summer of 2012 to make the European Central Bank to a de facto lender-of-last resort for embattled government. Second, the gradual relaxation of austerity policies in the euro area.
Since the onset of the euro crisis in 2010, policymakers have tried in vain to end it. Neither the establishment of the temporary European Financial Stability Facility nor the permanent European Stability Mechanism, both endowed with several hundred billion euros in lending capacities, managed to calm the markets.
The passage of both harsh austerity packages and the fiscal compact – which forces eurozone countries to limit structural budget deficits to 0.5% of GDP – have left financial markets completely unimpressed. Instead, after each new policy measure brought forward by the finance ministers, interest rates on bonds of southern European countries such as Spain and Italy continued to climb and the region's economies slid deeper into recession.
Mario Draghi has been much maligned in the European press, and in Germany in particular, where he has been branded "Draghiavelli". But only when he publicly stated last summer that the ECB would do "whatever it takes" to save the euro, announcing that the central bank would be willing to buy government bonds under the newly created Outright Monetary Transactions programme, did spreads between yields on periphery bonds and German bonds start to fall.
This fall in government spreads did not only benefit the treasuries of the embattled crisis countries. Since interest rates corporations have to pay follow closely that of their government, the reduction in spreads has also led to a relaxation of credit conditions for the private sector in the periphery countries. With the standard lag of interest rates influencing the real economy, the improvement in credit conditions can now be seen in economic activity.
Second, the breakneck austerity course Europe had embarked on in 2010 is slowly coming to an end. While this policy change did not attract as much public attention as Draghi's words and actions, it is no less real. As even the IMF has now acknowledged that austerity did not work quite as well as it originally believed, crisis and non-crisis countries across the continent have been given more time to get their fiscal balances in order.
According to the most recent forecast of the European commission, the structural budget deficit in the euro area has been reduced by 3.7% of GDP between 2010 and 2013. Yet, from 2013, no further tightening of fiscal policy is predicted. Instead, the structural budget deficits are expected to remain at roughly 1.5% of GDP over the coming year. Italy, Spain, France; in each of these countries, austerity measures are now pushed into the future not to derail the business cycle further.
And, what is more important, contrary to its attitude over the past years, the austerity preaching German finance ministry has quietly accepted these adjustments. The combination of lower interest rates and a slower path of fiscal tightening has done exactly what standard textbook models would predict: it has given the economy more breathing space and the private sector activity is now recovering.
Is, then, all well now? Unfortunately not. So far, this is not a self-sustaining recovery with strongly growing private investment, disposable income, falling unemployment and growing consumption. The crisis can still re-emerge like a monster from a B-movie. A new failure of governments in countries such as Italy and Spain might again spook the markets.
An adverse ruling by the German constitutional court on OMT (a case is to be decided this autumn) could also create new uncertainty and send spreads up again. Draghi might then still come to a rescue by actually implementing OMT and start buying bonds but, in the process, the recovery can easily be derailed.
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| READ THE ORIGINAL POST AT www.theguardian.com |
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| READ THE ORIGINAL POST AT business.time.com |
DigitalJournal.com | The Tragedy of Greek Austerity Continues… Truth-Out In fact, the Greek economy just posted its 20th consecutive decline, shrinking 4.6 percent in the three months through June – for a grand total of 20 percent shrinkage since January 2008. The only good news is that economists predicted a shrinkage rate ... Almost two thirds of Greek youth are unemployed Exotix expresses optimist about Greek recovery Greece to seize tax dodgers' assets |
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| READ THE ORIGINAL POST AT truth-out.org |
An interest rate rise from the ECB or even the tapering of the Federal Reserve's quantitative easing programme could stir up a renewed crisis
Olli Rehn, Brussels's economy commissioner, turned to English mountaineer Edward Whymper – the first man to climb the Matterhorn – for an adage to sum up the challenge still facing the eurozone: "Do nothing in haste; look well to each step, and from the beginning think what may be the end."
It hardly augurs well, then, that on the 1865 expedition Whymper was describing, one of his companions fell to his death on the descent from the Matterhorn's summit, dragging three others down with him. Whymper himself only survived because the rope broke.
While the eurozone has finally clambered out of its 18-month recession, led by a stronger-than-expected performance from the German and French economies, the danger for the 17-member bloc is far from over.
Few details are available about the breakdown of growth in these early estimates; but the German statistics office said domestic demand – and particularly investment – was largely responsible for the country's healthy-looking 0.7% growth in the second quarter. Unemployment in Europe's largest economy is close to a 20-year low.
That will have come as a welcome boost to Angela Merkel, who faces a tough re-election battle in September. But since the eurozone's leading economy is a major market for many of its crisis-hit southern neighbours, it should be good news for everyone else, too.
Portugal, where there have been protests over the latest round of austerity measures in recent weeks, also appears to have staged an impressive recovery, with GDP jumping by 1.1% in the second quarter of the year – though analysts were sceptical about whether that can represent the true strength of the embattled economy, where unemployment is running at more than 16%. Economists at Barclays predicted on Wednesday that Portugal will need fresh debt restructuring before it can emerge from its long-running crisis.
Wednesday's data showed that bailed-out Greece, Cyprus and Ireland are still in recession, as are Spain and Italy, the two countries deemed most at risk of needing future assistance from their fellow member-states.
The question now will be whether these data mark the start of a sustained, consumption-led recovery in Germany and France, which will ripple out to their eurozone neighbours; or a return to business as usual, with the strongest countries growing at a healthy clip, and the eurozone's embattled "peripheral" members trapped in a downturn.
While Germany's prospects look strong, it can't kickstart a recovery across 17 countries all on its own. France is battling high unemployment, and rock bottom corporate profitability means firms are unlikely to go on a hiring spree any time soon – which in turn makes a consumer-led recovery look highly unlikely. Italy is unlikely to achieve much better than 1% annual growth, which is hardly likely to suck in a flood of imports from Ireland or Greece.
As Dario Perkins, of consultancy Lombard Street Research, puts it: "Without France rediscovering its 'va-va-voom' and with the rest of the Mediterranean countries struggling with too much debt, Germany is still the euro area's only bright spot."
Even if the recovery did start to gather pace beyond the industrial heartlands of Germany, financial markets would rapidly start speculating about when the hawks at the European Central Bank would agitate for a rate rise. This would be potentially devastating for the weaker countries in the pack.
Meanwhile, though financial markets have been relatively calm of late, it wouldn't take much to stir up a renewed crisis – and the trigger could even come from the other side of the Atlantic. The International Monetary Fund warned recently that the planned "tapering" of the US Federal Reserve's massive quantitative easing programme could present a serious threat to the eurozone, if it drives up bond yields worldwide, making it more costly for governments in debt-burdened Europe to borrow.
As growth returns, at least to some, perhaps this summer will mark the beginning of the end for the eurozone crisis, but a sustainable economic model for the 17-member club remains a distant prospect. Rehn may yet prove to have been right to summon up the image of a team of doughty mountaineers, roped together, picking their way along the perilous path back to safer ground.
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Economic commissioner Ollie Rehn warns crisis far from over as eurozone reports 0.3% second quarter growth
Brussels warned against complacency on Wednesday as the troubled eurozone finally returned to growth, after 18 months stuck in a double-dip recession.
Olli Rehn, Europe's economic commissioner, welcomed news that the 17 nations using the single currency had expanded collectively by 0.3% in the three months to June – the first pickup in activity since the autumn of 2011.
But Rehn said celebrations should be put on hold, given Europe's jobs crisis and the wide disparity in economic performance between different countries in the eurozone.
"Yes, this slightly more positive data is welcome – but there is no room for any complacency whatsoever," Rehn said. "I hope there will be no premature, self-congratulatory statements suggesting the crisis is over, for we all know that there are still substantial obstacles to overcome. The growth figures remain low and the tentative signs of growth are still fragile."
Rehn said the average number for the bloc hid substantial differences between states, with Germany's performance outstripping those of Spain and Italy, which remained in recession. He added that some member states still had unacceptably high unemployment rates, with economic reforms still in their infancy, leaving the region with a "very long way to go".
"A sustained recovery is now within reach, but only if we persevere on all fronts of our crisis response: keep up the pace of economic reform, regain control over our debt, both public and private, and build the pillars of a genuine economic and monetary union," he said.
Figures released by Eurostat, the EU's statistical agency, showed that a stronger than expected performance by the single currency's two biggest economies – Germany and France – helped haul the eurozone out of recession. Financial markets had been expecting a rise in eurozone GDP following the increase in industrial production reported on Tuesday, but were surprised by news that Germany grew by 0.7% in the second quarter and France by 0.5%.
Along with the rest of the world, the eurozone fell into a deep slump in the winter of 2008-09 before recovering in 2010 and early 2011. But a second leg of the downturn then began as a result of the eurozone's sovereign debt crisis, which hit confidence, led to a mothballing of investment and resulted in the imposition of hardline austerity programmes.
Despite the growth in the second quarter, the European commission still expects the eurozone to suffer a second full calendar year of falling output in 2013, with growth resuming in 2014.
Eurostat's figures showed that Italy and Spain – the single currency's third and fourth biggest economies – both remained in recession in the second quarter of 2013. Spain's economy shrank by 0.1%, while Italy posted a 0.2% decline.
The Dutch economy also contracted by 0.2% but Portugal – one of the three countries that required a financial bailout – recorded the fastest expansion of any eurozone country, with 1.1% quarterly growth.
Torben Kaaber, chief executive of Saxo Capital Markets, said: "So the eurozone is finally out of recession. While this wasn't entirely unexpected, the strength of the growth in the second quarter, 0.3%, was. The growth was primarily driven by the German economy, which grew 0.7% on the back of increase in domestic private and public consumption. This will provide a welcome boost to Chancellor Merkel in the runup to the German elections; however, critics will point to the continuing underperformance of southern Europe, and to Greece and Italy in particular, and argue that a few select countries cannot continue to hold up the common market. As the value of the euro climbs today, the jubilation will be short-lived, as the consistent problem of the southern neighbours will weigh on the minds of investors."
Dario Perkins of Lombard Street Research said Germany would continue to be crucial to the eurozone's recovery, adding that there were signs of consumer spending and investment picking up. "But the French contribution to this recovery is likely to sag, thanks to its labour market which is still in a horrible state. Unemployment has surged over the past two years and the demand for labour has collapsed, with the level of job vacancies at multi-decade lows. Without France rediscovering its 'va-va-voom' and with the rest of the Mediterranean countries struggling with too much debt, Germany is still the euro area's only bright spot."
David Brown of New View Economics said: "It is a tale of two very different economies. Germany is doing all the hard work in the vanguard of strong recovery as its 0.7% second-quarter GDP expansion showed. On the other side of the equation, the troubled eurozone economies are still mired down in the mud of deep recession risk."
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Our correspondents report on business life in Germany, France, Italy, Greece and Ireland
Germany
For one of the 340,000 small- and medium-sized businesses that make up Germany's renowned Mittelstand economy, Wednesday's figures proved the wisdom of sticking doggedly to long-term goals. Phoenix Contact, an electronics manufacturer based in Blomberg in central Germany, decided not to take the axe to its operations in southern Europe when the eurozone tipped into crisis.
"In Europe last year, growth was flat," said Frank Stührenberg, vice-president of global sales at Phoenix Contact. "And in southern Europe, we were seeing minus growth." Yet rather than desert Europe completely for its more profitable American or Asian markets, the firm kept its workforce and waited for recovery.
"We didn't take our people out of Spain for example, we even put more investment in. And that's paying out returns now," he said.
And as Wednesday's figures show Europe's crisis economies slowly picking up, the Mittelstand economy is set to reap the benefits. Steady increases in investment in energy and transport infrastructure in southern Europe have already bolstered Phoenix Contact in Italy and Spain this year, where the firm is finally seeing growth after years of losses, said Stührenberg.
"We're benefiting from that as a subcontractor," he said, "everybody in Germany is profiting a bit now from this."
Mittelstand companies like Stührenberg's employer have not been complacent, and have used the dead time waiting for European recovery to scan the horizon for the next big innovations. For Phoenix Contact this means focusing on Germany's future as a leading producer of renewable energy.
Now seeing annual growth of around 4.5%, the company – which supports a global workforce of 12,800 – is, like the rest of the German economy, "not about to sit back and relax," said Stührenberg.
France
News that the eurozone's second largest economy had exited recession came as an unexpected fillip for France's socialist government, which has based its 2014 budget on 0.2% annual growth. Official data showed that the economy grew by 0.5% in the second quarter. The French finance minister, Pierre Moscovici, said: "The figure, higher than available forecasts, confirms that the French economy has come out of recession, which was already hinted at in recent surveys and figures for industrial production, consumption and foreign trade, and amplifies the encouraging signs of recovery."
The manufacturing sector was particularly dynamic, showing 2% growth in the second quarter, with production in the automobile and aeronautic industries leaping by 8.2% in the second quarter.
Greece
Like many Greeks, Kostas Xexakis was left bewildered by the news that the eurozone recession is officially over. For the 62-year-old framer, working out of a two-room atelier in Athens' Kolonaki district, the downturn feels anything but over and he counts himself lucky: he still has a job and a few customers to boot.
"In no way could you possibly say the recession has ended," he said. "Everyone I know is squeezed and with unemployment at more than 27% I don't see things getting better anytime soon." The Green economy contracted by 4.6% on an annualised basis in the second quarter of 2013 – the 20th consecutive quarter of decline.
Across Athens tens of thousands of family-owned businesses and shops – once the lifeblood of the Greek economy – have been forced to close, their shuttered exteriors one of the most visible signs of the collateral damage wrought by the nation's worst crisis in modern times.
In upmarket Kolonaki, Xexakis does not have that problem. But work has dropped dramatically, and like all Greek businessmen he has been hard hit by reduced earnings, consumer prices that have remained stubbornly high, and a cascade of "emergency" taxes enforced in a bid to increase revenue.
Echoing a widely held view, Xexakis believes things will only begin to improve when international creditors propping up the economy decide to ease off on the austerity that has plunged Greece into ever deeper recession. "Our only hope, unfortunately, lies with Germany deciding to give us a break because, clearly, austerity isn't working," he insisted.
Ireland
In the heart of Ireland's traditional folk music scene, in county Clare on the west coast, there are signs of a recovery in the country's struggling services sector. Donal Minihane, owner of the Hotel Doolin, has seen an upturn in European visitors for the first time in years. "We saw people coming to us from all over Europe and the UK and even the United States. But there were a huge amount of European visitors for the first time in many years."
Situated at the edge of Doolin village, the hotel has enjoyed a spike in tourist numbers this year with room rates now up by 15% and an increase in staff to 80. Having staged three festivals at the hotel this year – for lovers of literature, beer and folk music – Minihane is optimistic that business is starting to take off and that perhaps the worst of the recession in Ireland is over.
"Next year is looking very good, especially the weddings market. I have no vacancies in 2014 from May to October."
Italy
The eurozone's exit from recession comes amid cautious predictions in its third-largest economy that an eight-quarter long recession there may soon be over, too. Enrico Letta's government is predicting a return to modest growth by the end of the year. That hope was boosted by news the economy contracted less than expected in the second quarter, by 0.2%.
"For the time being we still have some domestic headwinds which are weighing on growth," said Marco Valil, chief eurozone economist for UniCredit in Milan. "But we think that in the course of the year we will see Italy exiting the recession."
He said the drivers of this modest recovery would be an easing of fiscal consolidation, low inflation and improving global growth due to improvements in Italy's top two trading partners – Germany and France.
For the moment, however, the spumante will be kept on ice. Italy's longest recession since the second world war has seen unemployment rise to over 12%, with youth joblessness at over 39%.
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| READ THE ORIGINAL POST AT www.theguardian.com |