Andrews, N. (2014) “Europe’s Losing Battle For Recovery“, Evergreen Gavekal, Daily
The wobble in world markets continues, with stock indices across all time zones down steeply in recent sessions. Investors are not only realigning their exposure in anticipation of tighter liquidity conditions as the US Federal Reserve finally brings its asset purchases to a close later this month. After today’s European Central Bank (ECB) meeting they are also looking nervously at the magnitude of the task facing Eurozone policymakers. And they appear to be coming to the conclusion that generating a rebound in growth may be too tough a job for Europe’s leaders to accomplish in the near term.
With France and Italy – the Eurozone’s second and third biggest economies – either stagnating or contracting, to achieve a convincing recovery will require policymakers to press home their attack on three fronts: structural reform to increase economic flexibility, fiscal easing to stimulate activity, and monetary expansion to support credit growth. On all three fronts they face determined opposition.
- Structural reform: On Sunday President Francois Hollande’s ruling Socialist Party lost control of the Senate to France’s center-right Union for Popular Movement (UMP) party, a development which will only complicate the implementation of reform plans already facing staunch resistance from strikers in the transport, manufacturing and service sectors. Meanwhile Italy’s three most powerful trade unions agreed on Monday to form a united front in opposition to Prime Minster Matteo Renzi’s proposed Jobs Act. Worse, Renzi has failed to win over the left wing of his own party, which accuses him of slavish obedience to Berlin’s policy diktat. Although the party’s senior leadership pledged its support for the bill this week, a possible showdown in the Senate on October 7 could still see key reform proposals significantly watered down.
Σχετικές αναρτήσεις:
- International Monetary Fund (2014) “World Economic Outlook, An Uneven Global Recovery Continues“, WEO Update, Ιούλιος.
- Pelagidis, Τ. & Mitsopoulos, Μ. (2014) “Greece: From Exit to Recovery?“, Brookings Institution Press, Ιούνιος
- Ozlem Onaran, Ο. & Stockhammer, Ε. (2014) “Why The Recovery Needs Wage Growth“, Social Europe Journal, 21 Μαΐου.