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Growth still a rare sighting in Europe

Published Wednesday, September 24th, 2014

Dear Mario tells us that the recovery is “losing momentum”. The President of the ECB must be in dreamland because there has been no growth and the only momentum has been to the downside. It would be more accurate and honest if he were to declare that contraction is “gaining momentum”.

The latest set of PMI’s for the Eurozone are as dismal as ever. The composite number came in at a nine month low of 52.3, down from 52.5 in August. According to Markit this points to a third quarter growth rate of only 0.3%, an astonishingly poor performance when you consider that it is six years since the financial collapse and hardly a year has passed since 2011 when we have not been assured by the ECB and/or the European Commission that matters are under control and the eurozone is on track to recovery.

It patently is not on track to recovery and is a drag on the entire global economy. The worry is that whilst there are signs of progress in the periphery of the Eurozone the core, except for Germany, is running backwards. The French PMI came in at 49.1, down from 49.5 last month. Opinion is mounting that the Italian debt level at over 130% of GDP is rising because deflation is unsustainable leaving Eurozone exit and devaluation the only realistic solution if social disorder is to be avoided.

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Posted by David Hufton