NEW YORK | In the idyllic setting of the Catoctin Mountains of Maryland 63 miles from the White House, world leaders gathered on Friday for the G8 summit. This time, the agenda has real economic substance. Will the intimacy of the lodges in the wilderness help to solve the eurodrama? The pressure is expected to be high on Mrs Merkel. She is the only one representing the “austerians” versus the…
LONDON | The euro area continued to run a small trade surplus up to March. This is encouraging on account of stronger import prices, led by energy, in the first quarter of the year. But a closer look into the volumes suggests that import volumes are weakening. Estimates from Barclays Capital analysts put the declining at around 1% in January to March 2012 from the same period in 2011, after a…
By Tania Suárez, in Madrid | The director of strategy and macroeconomics at Inverseguros SVB, Alberto Matellán, believes that austerity and growth are not only compatible but should be applied together. Mantellán thinks the European Central Bank could put again in use its monetary policy tools, such as the Securities Market Programme (SMP) or the Long-Term Refinancing Operation (LTRO). Should the ECB lower again interest rates for the euro zone? The…
LONDON | The National Institute of Economic and Social Research in London said the European Monetary Union will take a long year and a mild recession before finding its way towards growth. The UK’s economy would evolve along the same path. In a prospect note, analysts at the NIESR indicated that their baseline forecast is for global growth of 3.7 percent in 2012. Growth will accelerate to 4 percent in 2013. “We…
MADRID | Barclays Capital made a realistic yet not Armageddon-like exercise in which the Spanish banking sector would need a recapitalisation equivalent to 6 percent of the country’s GDP, plus an additional 5.4 percent of GDP as an extra-safety calculation. Its analysts threw in 0.9 percent of GDP in Greek liabilities, and 3.5 percent of GDP in administrations’ accumulated debt payments. The scenario considered included yields on 10-year bonds of…
MADRID | Following German Chancellor Angela Merkel’s instructions, those supposedly at command in Euroland zealously repeat that growth and austerity are not in contradiction. Beware about such a slim talk. Their underlying message is that fiscal compact must be preserved at all costs, growth delivery amounting to a merely cosmetic make-up. Eurocrats are working out ways to sell through financial engineering the same money under a more “à la mode” disguise….
NEW YORK | The debate between austerity or growth to cure Europes illness is in full swing. Austerians are, though, losing support. A consensus is growing that current cuts alone aren’t likely to tackle the euro zone crisis. For US celebrity economist and director of the Earth Institute Jeffrey Sachs, “Fiscal policy alone won’t save Europe,” he said in the launch of the Center on Global Economic Governance at Columbia…
MADRID | First quarter figures showed a marked deterioration in central government finances. Its gap has grown by ¾ as compared to the same period of the previous year, reaching 1.85% in terms of GDP. A most disappointing outcome that undermines firm pledges to slash deficit this year in a substantial way. Claims that more money has been pumped to regional authorities, pensions and unemployment benefits appear as futile excuses. For…
MADRID | The Bank of Spain has cleared the plans presented by financial institutions to meet the demanding requirements designed to clean up real estate exposure. As expected, extra needs fall short by 10% to the €50 billion that the government forecast when launching the reform in February. Considerable adjustments undertaken at last year close have eased up the pending effort. Will this encouraging result calm down market concern? There is…
MADRID | The Spanish government claims the 2012 budget to be the toughest ever. On face value it embodies a 2.5% GDP deficit reduction, an awesome effort by any standard. Slashing expenditure amounts to two thirds of the squeeze, the rest falling on tax adjustments. Will budgetary crunch depress activity or axe main spending policies? A closer look dispels any anxiety over these daunting effects. Many of the cuts come…