The Business Climate Indicator (BCI) for the euro area fell again in March, to its lowest level since January 1985.
This points to another markedly negative outcome for year-on-year industrial production growth in February, after the record fall registered in January.
Given the current levels, it also suggests that industrial production growth will remain clearly subdued in March.
The drop in the BCI reflects a worsening situation in most of its underlying components, a European Commission media statement said.
Managers' assessment of current overall order books and export order books deteriorated even further from last month's level.
Stocks of finished goods have again risen towards December's record highs, while the production trend observed in recent months improved only marginally from a very low level.
Looking forward, managers remain very negative about their production expectations outlook.
In March, the Economic Sentiment Indicator (ESI) for the EU and the euro area declined again, but more slowly than in the first two months of the year amid signs of stabilisation in some sectors.
It fell by 0.6 points in the EU, and by 0.7 points in the euro area, to 60.3 and 64.6, respectively.
The indicators for both regions now stand at their lowest levels since the current series was launched in January 1985.
The fall in the ESI is attributed to the deteriorating sentiment in the industry and services sectors, which fell by the same amount (-2 points) in both regions. In the other sectors, a mixed picture is emerging.
Consumer sentiment stabilised in the EU, but fell by one point in the euro area.
Retail trade increased by two points in the EU and by one point in the euro area, reinforcing the rebound which started in February. Construction in both regions stabilised at the levels seen in February.
Among the largest EU member states, Italy witnessed the most significant decline in sentiment (-4.5 points), while the fall has been more marginal in France and Poland (-1.0), Germany (-0.8) and the UK (-0.4). Economic sentiment recovered slightly in the Netherlands (1.3) and in Spain (0.8).
The financial services confidence indicator - not included in the ESI - improved by one point in the EU but deteriorated by four points in the euro area, reversing the previous month's gain.
Compared to February, managers' expectation of demand for their services worsened in both areas - significantly in the euro area, but to a much lesser extent in the EU.
Friday, April 24, 2009
EU commits to help U.S. stem economic crisis Officials say they have put previous arguments about stimulus behind them
PRAGUE - The European Union said Sunday that it has joined forces with the United States to tackle a "severe and global" economic crisis.
After a meeting Sunday with President Barack Obama, leaders of the European Union's 27 nations said they and the U.S. "are determined to work hand in hand" to put in practice decisions they made at a Group of 20 summit to counter the economic downturn.
This comes after weeks of trans-Atlantic criticism as Europe and the U.S. sniped over how they plan to turn their economies around.
U.S. officials want Europe to spend more to stimulate the economy. Europe claims it is doing enough, and tougher financial rules are needed to solve some of the problems that caused the current crisis of confidence in the financial system.
But after Sunday's meeting in Prague, the bloc said these harsh words were behind them.
Czech Prime Minister Mirek Topolanek, who led the talks, said the summit showed "a new level in EU-U.S. relations."
EU Commission President Jose Manuel Barroso said the meeting focused on "what we can do globally" on common threats such as nuclear proliferation and climate change.
Barroso told reporters that Obama and the EU leaders identified three main areas where the United States and Europe need to show strong leadership: climate change, energy security and trade.
He said the EU's ties with the United States were "by far the most important economic relationship in the world," with $2 billion per day spent trading in goods and services.
The EU leaders said in their statement that they were "particularly pleased that global financial regulation and supervision will be strengthened" as a result of talks Thursday among leaders of the Group of 20 economic powers.
Rich and emerging nations pledged at the G-20 summit to fight economic flashpoints around the world with some $1.1 trillion funding for the International Monetary Fund and World Bank. They will also try to improve global trade with new finance for traders hit by the credit crunch.
The EU said it was "ready to join forces" with the United States to resist protectionism and strengthen trans-Atlantic and international trade and investment.
The EU is particularly keen to restart work on a long-stalled World Trade Organization deal after negotiations broke down last year on U.S. and Indian unwillingness to break down some trade barriers.
After a meeting Sunday with President Barack Obama, leaders of the European Union's 27 nations said they and the U.S. "are determined to work hand in hand" to put in practice decisions they made at a Group of 20 summit to counter the economic downturn.
This comes after weeks of trans-Atlantic criticism as Europe and the U.S. sniped over how they plan to turn their economies around.
U.S. officials want Europe to spend more to stimulate the economy. Europe claims it is doing enough, and tougher financial rules are needed to solve some of the problems that caused the current crisis of confidence in the financial system.
But after Sunday's meeting in Prague, the bloc said these harsh words were behind them.
Czech Prime Minister Mirek Topolanek, who led the talks, said the summit showed "a new level in EU-U.S. relations."
EU Commission President Jose Manuel Barroso said the meeting focused on "what we can do globally" on common threats such as nuclear proliferation and climate change.
Barroso told reporters that Obama and the EU leaders identified three main areas where the United States and Europe need to show strong leadership: climate change, energy security and trade.
He said the EU's ties with the United States were "by far the most important economic relationship in the world," with $2 billion per day spent trading in goods and services.
The EU leaders said in their statement that they were "particularly pleased that global financial regulation and supervision will be strengthened" as a result of talks Thursday among leaders of the Group of 20 economic powers.
Rich and emerging nations pledged at the G-20 summit to fight economic flashpoints around the world with some $1.1 trillion funding for the International Monetary Fund and World Bank. They will also try to improve global trade with new finance for traders hit by the credit crunch.
The EU said it was "ready to join forces" with the United States to resist protectionism and strengthen trans-Atlantic and international trade and investment.
The EU is particularly keen to restart work on a long-stalled World Trade Organization deal after negotiations broke down last year on U.S. and Indian unwillingness to break down some trade barriers.
Cash handouts not best way to stimulate economy: IMF
The International Monetary Fund (IMF) says cash bonus payments are not necessarily a very useful way to stimulate the economy.
The Federal Government has spent just under $21 billion on cash handouts as part of its two economic stimulus packages.
But the IMF's chief economist, Olivier Blanchard, has told ABC1's 7:30 Report that speeding up infrastructure projects is a better way to stimulate economies during a recession.
"If people were to spend it, it would be great. The main problem is basically at this stage, we think if we put money randomly in people's pockets they're going to save most of it," he said.
"They may feel good about it, but in terms of what this does to the economy it's not very good. At this stage what we need is an increase in demand so you basically want to put the money where it's going to be spent."
Speeding up infrastructure
Meanwhile the IMF says the predicted length of the global recession will make infrastructure projects the ideal way to stimulate the economy.
Mr Blanchard says governments should be bringing forward infrastructure projects that are scheduled to begin in several years' time.
"Typically with these type of measures, is that it takes so long to actually get them going that by the time you put them in place, the recession is gone," he said.
"Well we're unlucky that this time we have a long recession, a slow recovery, so even these projects can be thought about and started now."
The Federal Government has spent just under $21 billion on cash handouts as part of its two economic stimulus packages.
But the IMF's chief economist, Olivier Blanchard, has told ABC1's 7:30 Report that speeding up infrastructure projects is a better way to stimulate economies during a recession.
"If people were to spend it, it would be great. The main problem is basically at this stage, we think if we put money randomly in people's pockets they're going to save most of it," he said.
"They may feel good about it, but in terms of what this does to the economy it's not very good. At this stage what we need is an increase in demand so you basically want to put the money where it's going to be spent."
Speeding up infrastructure
Meanwhile the IMF says the predicted length of the global recession will make infrastructure projects the ideal way to stimulate the economy.
Mr Blanchard says governments should be bringing forward infrastructure projects that are scheduled to begin in several years' time.
"Typically with these type of measures, is that it takes so long to actually get them going that by the time you put them in place, the recession is gone," he said.
"Well we're unlucky that this time we have a long recession, a slow recovery, so even these projects can be thought about and started now."
UK economy shrinks at sharpest rate since 1979
Britain's economy shrank at its fastest pace in almost 30 years in the first quarter of 2009, official data shows, suggesting the recession may be deeper than feared.
The Office for National Statistics (ONS) said gross domestic product fell 1.9 per cent on the quarter in the first three months of this year, the biggest fall since the third quarter fo 1979 and below forecasts for a 1.5 per cent contraction.
Most analysts had expected the 1.6 per cent fall seen at the end of last year to mark the worst period of the recession.
On the year, GDP fell by 4.1 per cent, the biggest annual drop since the end of 1980. Analysts had expected a 3.8 per cent contraction.
The figures suggest there are downside risks to finance minister Alistair Darling's forecast for a 3.5 per cent contraction this year - he had expected first-quarter GDP figures to show a similar drop to the final quarter.
The new data also suggest policymakers may need to do more to kick-start the economy, having already slashed interest rates to a record low of 0.5 per cent and started buying assets with newly created money.
The government has also pumped more than 20 billion pounds ($41 billion) into the economy.
The ONS data showed the biggest quarterly fall in manufacturing output since records began in 1948 and the biggest quarterly fall in services output since 1979.
Business services and finance recorded its biggest drop in output since records began in 1983.
Separate data showed an unexpected rise in retail sales on the month in March driven by strength in clothing and food sales.
The Office for National Statistics (ONS) said gross domestic product fell 1.9 per cent on the quarter in the first three months of this year, the biggest fall since the third quarter fo 1979 and below forecasts for a 1.5 per cent contraction.
Most analysts had expected the 1.6 per cent fall seen at the end of last year to mark the worst period of the recession.
On the year, GDP fell by 4.1 per cent, the biggest annual drop since the end of 1980. Analysts had expected a 3.8 per cent contraction.
The figures suggest there are downside risks to finance minister Alistair Darling's forecast for a 3.5 per cent contraction this year - he had expected first-quarter GDP figures to show a similar drop to the final quarter.
The new data also suggest policymakers may need to do more to kick-start the economy, having already slashed interest rates to a record low of 0.5 per cent and started buying assets with newly created money.
The government has also pumped more than 20 billion pounds ($41 billion) into the economy.
The ONS data showed the biggest quarterly fall in manufacturing output since records began in 1948 and the biggest quarterly fall in services output since 1979.
Business services and finance recorded its biggest drop in output since records began in 1983.
Separate data showed an unexpected rise in retail sales on the month in March driven by strength in clothing and food sales.
Obama Joins Credit Card Reform Debate
President Obama met with representatives of the credit card industry April 23 and outlined core principles that he would like to see included in legislation currently winding its way through Congress.
Obama called for strong and reliable protections for consumers that ban unfair rate increases and forbid abusive fees and penalties. In addition, the president urged an end to confusing terms and conditions and stressed that all forms and statements use “plain language that is in plain sight.”
Credit card companies must also be required to make their contract terms easily accessible and must provide consumers with the necessary information so that they can comparison shop. Firms must also be required to offer at least one simple, straightforward credit card that offers the strongest protections along with the simplest terms and prices, the president said.
Obama also pressed for increased accountability in the system, which he noted would require stronger monitoring and enforcement, and penalties for violations of the law.
Meanwhile, Senate Banking Committee Chairman Christopher Cox, D-Conn., and Sen. Charles Schumer, D-N.Y., have called on federal regulators to implement an emergency freeze on interest rates tied to existing balances on credit cards.
Writing to Federal Reserve Board Chairman Ben Bernanke and other regulators, the senators note that the Fed has already issued a new regulatory rule that would ban the practice of retroactively raising the interest rates on existing credit card balances. However, the rule is not scheduled to take effect until July 2010, giving companies more than a year to raise rates on consumers preemptively to get under the deadline, the senators warn.
Schumer and Dodd said the Fed should invoke its emergency powers to make the rule effective immediately. “Over the past year, the Federal Reserve has cited the financial crisis as one of the reasons for acting quickly to implement new lending facilities and programs to protect financial institutions. It is long past time for the regulatory agencies to act with the same sense of urgency to protect consumers from the behavior of those same financial companies,” the senators wrote.
Obama called for strong and reliable protections for consumers that ban unfair rate increases and forbid abusive fees and penalties. In addition, the president urged an end to confusing terms and conditions and stressed that all forms and statements use “plain language that is in plain sight.”
Credit card companies must also be required to make their contract terms easily accessible and must provide consumers with the necessary information so that they can comparison shop. Firms must also be required to offer at least one simple, straightforward credit card that offers the strongest protections along with the simplest terms and prices, the president said.
Obama also pressed for increased accountability in the system, which he noted would require stronger monitoring and enforcement, and penalties for violations of the law.
Meanwhile, Senate Banking Committee Chairman Christopher Cox, D-Conn., and Sen. Charles Schumer, D-N.Y., have called on federal regulators to implement an emergency freeze on interest rates tied to existing balances on credit cards.
Writing to Federal Reserve Board Chairman Ben Bernanke and other regulators, the senators note that the Fed has already issued a new regulatory rule that would ban the practice of retroactively raising the interest rates on existing credit card balances. However, the rule is not scheduled to take effect until July 2010, giving companies more than a year to raise rates on consumers preemptively to get under the deadline, the senators warn.
Schumer and Dodd said the Fed should invoke its emergency powers to make the rule effective immediately. “Over the past year, the Federal Reserve has cited the financial crisis as one of the reasons for acting quickly to implement new lending facilities and programs to protect financial institutions. It is long past time for the regulatory agencies to act with the same sense of urgency to protect consumers from the behavior of those same financial companies,” the senators wrote.
Thursday, April 23, 2009
Invited to the debate of European Parliamentary Groups' Chairmen organised by the European Policy Centre, the Chairman of the Centre-Right Group (EPP-ED) said he regrets that some political families are using the economic crisis "to build up their electoral strength".
"Yes, capitalism, as it is been working since the 1990s, in particular since the Clinton presidency, this capitalism without any rules, is the cause of the serious dysfunctions that we are suffering today" Joseph Daul said.
"But that very capitalism, that 'Game Boy' capitalism, without any rules or any moral, never was neither Europe's, nor the Centre-Right's capitalism.
The Chairman of the most influential Group in the European Parliament welcomed the impetus that Europe gave, under the French Presidency, to a refoundation of capitalism. He pointed to the protective role of the Euro and defended the social market economy model, which is "Europe's trademark".
Joseph Daul underlined that, when the crisis is behind us, we will count losers and winners. "Losers will be those who will have made populist and short term policies, winners will be those who will not have given in to the first demonstrators. Winners will be those who will have had the courage to reform through solidarity measures which are compatible with a competitive economy."
"Yes, capitalism, as it is been working since the 1990s, in particular since the Clinton presidency, this capitalism without any rules, is the cause of the serious dysfunctions that we are suffering today" Joseph Daul said.
"But that very capitalism, that 'Game Boy' capitalism, without any rules or any moral, never was neither Europe's, nor the Centre-Right's capitalism.
The Chairman of the most influential Group in the European Parliament welcomed the impetus that Europe gave, under the French Presidency, to a refoundation of capitalism. He pointed to the protective role of the Euro and defended the social market economy model, which is "Europe's trademark".
Joseph Daul underlined that, when the crisis is behind us, we will count losers and winners. "Losers will be those who will have made populist and short term policies, winners will be those who will not have given in to the first demonstrators. Winners will be those who will have had the courage to reform through solidarity measures which are compatible with a competitive economy."
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