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Euro zone exits deflation, unemployment stable – Eurostat

Posted 30/04/2015

Inflation in the euro zone was at 0% in April

The euro zone exited four months of deflation in April, official data showed today, reversing a dangerous bout of declining prices and reviving hopes of economic recovery in Europe.


Inflation in the euro zone hit 0% in April, after a drop of 0.1% in March, with low energy costs still impacting the cost of living, the EU statistics agency Eurostat said.

The news will be welcomed at the European Central Bank, which in March launched a historic round of monetary stimulus to fight falling prices in the euro zone.

Economists fear deflation almost as much as rampant inflation because shoppers tend to put off purchases in the belief they may be cheaper in the future. This leads to a spiral of ever weaker demand, slowing the economy and pushing up unemployment.


Meanwhile, unemployment remained stable at 11.3% in March compared to February, Eurostat said, which was down from 11.7% a year before.

Today's figures reveal that Ireland saw the largest decrease in EU unemployment from March last year to March of this year, with a drop from 12% to 9.8%.

The next largest decreases for the same period were found in Spain (25.1% to 23%) and Poland (9.6% to 7.7%).

The largest increases were registered in Croatia (17.3% to 18.2%), Finland (8.4% to 9.1%), Italy (12.4% to 13%), France (10.1% to 10.6%) and Belgium (8.4% to 8.5%).

The EU youth unemployment rate fell from 22.8% to 20.9% and the Euro Area decrease was from 24.2% to 22.7% during the same 12 month period.

Unemployment in powerhouse Germany was unchanged at 4.7%, the lowest rate in the currency bloc. The highest rate was in debt-stricken Greece, at 25.7% in January, the latest data available, which was slightly lower than 25.9% a month earlier.

Youth unemployment in Greece and Spain stood at a huge but lower 50.1% in both countries.

Worryingly, Italy, the euro zone's third biggest economy, saw joblessness continue to rise to 13%, up from 12.7% in February.

EU-wide, unemployment in the 28 member states was also unchanged at 9.8%.

A week ahead of a general election, Britain was at a low 5.5% in January, a huge drop from 6.9% a year before in what could only be good news for incumbent Prime Minister David Cameron.



Not lovin' it: McDonald's record losses in all regions

Posted 22/04/2015

By Joseph Conroy

The golden arches seem to be losing their appeal

McDonald's first quarter results show a 2.3 percent decrease in sales - the company attributes this to "negative guest traffic in all major segments" - this is corporate speak for 'less people are going to McDonald's in all regions.'

Consolidated operating income fell by a significant 28 percent - revenues decrease by 11 percent, but most of this drop was due to fluctuations in currency markets.


Diluted earnings per share were down to $0.84, a decrease of 31 percent.

Sales were better than the global average in Europe, where they fell by 0.6 percent - the company's statement adds that the group had a positive quarter in the UK - but business was poor in France and Russia. Operating income generated in the region was down by 20 percent (4 percent in constant currencies).

The company's operating income in its APMEA (Asia Pacific Middle East and Africa) operations declined by a massive 80 percent in the first quarter - 77 percent in constant currencies. McDonald's says that this was due to "strategic restaurant closings and other charges and negative operating performance in Japan and China" - the company was rocked by a major food safety scandal in Japan during 2014.


"As the world's leading restaurant company, we are evolving to be more responsive to today's customer," said McDonald's President and Chief Executive Officer Steve Easterbrook in a statement accompanying the figures.

He continues: "McDonald's management team is keenly focused on acting more quickly to better address today's consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan on May 4, 2015."

So when you get the urge for a burger and chips, where are you most likely to frequent?


Stats Source Newstalk



TTIP negotiation advancing behind closed doors Guadalupe del OlmoGuadalupe del Olmo

Posted 21/04/2015

By Guadalupe del Olmo

As the ninth round of TTIP negotiations began in New York, the European Commission yesterday published an in-depth survey of SME’s attitudes to the deal.

Almost 900 companies from 25 Member States were surveyed. The report finds that SMEs are already big winners from transatlantic trade. 150,000 SMEs exported to the United States in 2012, accounting for 28% of all EU exports there (equating to approximately EUR 77 billion).

SMEs in sectors linked to food, beverages & agriculture; clothing, textiles & leather; as well as chemicals had an above-average share of EU exports. The full report is available here:

Cecilia Malmström, European Commissioner for Trade said: "Small and medium-sized enterprises are the backbone of the European economy. These companies will channel the benefits of TTIP back to their local communities. That's why the EU and the US are working to deliver an ambitious agreement that meets their concerns. This report helps us do that, by pointing out the concrete obstacles and the problems that we have to solve. This is one of the issues to be discussed when our negotiators meet this week.”


She notably said that the regulatory part of TTIP is very much a small business agenda, emphasising that it is incomprehensible to think that TTIP is only good for big business. “SMEs suffer more from import obstacles than big companies. Those obstacles can be taken away by TTIP,” she said. 


Meanwhile, citizens remain unconvinced of the benefits of the biggest US-EU free trade agreement in history. A wave of protest marches and information events against the Transatlantic Trade and Investment Partnership (TTIP), the Canada-EU Trade Agreement (CETA), and the Trade in Services Agreement (TISA) last Saturday swept across Europe, the US, Canada and number of other countries. On the eve of the 9th TTIP negotiation round set for New York (20-24 April), thousands took to the streets in the European capitals of London, Brussels and Helsinki.

In Munich, which had seen 10,000 protesters successfully bring down the Anti-Counterfeiting Trade Agreement (ACTA), an estimated 20,000 protestors took part in what was the largest event in Germany.

Given the rising protests – 1.8 million Europeans have already signed a declaration against TTIP and CETA and around 400 organisations are campaigning against it – the outcome is still very much up in the air.

The Commission, gearing up for this negotiation round, answered the protests yesterday by underlining of how transparent the negotiations are, and pointed out what it sees as misunderstandings by opponents.

Ms Malmström emphasized that the TTIP is not a European Commission project but that of the 28 EU Member States; however she reproached their lack of engagement with TTIP. This was in response to a criticism by Angela Merkel and the German government of the deal, a heated debate that the Commissioner finds “bizarre” since Germany has the most to gain from TTIP.

Meanwhile in Belgium, the Wallonian Parliament adopted yesterday a resolution calling for the suspension of TTIP negotiations. The Socialist Party MP Olgra Zrihen said that "we are convinced that this resistance can move the lines and we decided to resist," she also considered that the current lack of transparency is a real handicap.


In fact, EU Ombudsman Emily O’Reilly last year called on the Commission to release more documents relating to TTIP into the public domain. Partly as a response to O’Reilly’s report, the Commission has increased public disclosure of TTIP documents.

Despite the timid efforts for more disclosure of information on the negotiations, which have been carried out almost behind closed doors, detractors of TTIP are growing in number.

This increasing opposition won't be appeased only by the reassuring words of Ms Malmström, but for a real participatory process in the negotiations.

Whether I would vote in favour or against TTIP, it is very likely that the agreement finally goes through, but wait a minute…I can't vote on it, in fact no other European can…


By Guadalupe del Olmo for EU Spectator


UK competition authority stands firm on Ryanair ruling

Posted 19/04/2015

UK's CMA has published a provisional verdict on Ryanair request

In the seemingly never-ending saga of the IAG takeover of the Irish national carrier, the UK's Competition and Markets Authority (CMA) said it would not change an order for Ryanair to sell down its 30% stake in rival Aer Lingus because of IAG's proposed bid for Aer Lingus.

Ryanair had asked the CMA to reconsider its 2013 decision.

The airline said the fact that IAG had secured support from the Aer Lingus board for the €1.36 billion bid disproved the regulator's argument that its shareholding might be an obstacle to Aer Lingus being acquired by another airline.

The CMA published a provisional verdict on Friday morning.

This said that as British Airways owner IAG has made its bid conditional on securing Ryanair's support, the low budget airline remains a significant hurdle to any merger.

Ryanair has described the CMA's provisional decision as "manifestly wrong".


The airline has made a series of legal challenges to the CMA order to reduce its shareholding by at least 25% and is planning to appeal to the UK's Supreme Court.

Variety of Government views on IAG proposal for Aer Lingus

The Minister for Transport Pascal Donohoe has confirmed he will be bring a recommendation to the Cabinet in the coming weeks on whether the State should sell its stake in Aer Lingus.


"I have maintained this should be brought to a conclusion as soon as possible," he stated.

The airline is currently subject to a bid by IAG which owns British Airways.

Minister Donohoe said there were a "variety of views in Government of this proposal."

The Government's review group hired IBI Corporate Finance and Credit Suisse to value the Heathrow slots used by Aer Lingus.

Mr Donohoe said the slots were "hugely important" and added that he had not yet received the final report from the steering group.

Shares in both Ryanair and Aer Lingus were lower in Dublin trade by the close of business.


Whether the good of the passengers in this on-going story outweighs the vested interests of politicians, the only interest for the latter is not seats on an airplane but seats in Parliament. The business community and commentators from the aviation sector generally support the proposed IAG offer, but in Ireland, as perhaps in other jurisdictions, all politics is local and the next general election is only just over a year away. Balancing all these considerations, business, or political will, I think make the miracle of flying itself seem… easy.



Greece will not get delay on debt repayments - IMF chief Christine Lagarde

Posted 16/04/2015

Christine Lagarde said the IMF board had not granted a payment delay in the last 30 years

International Monetary Fund chief Christine Lagarde has strongly rebuffed talk of Greece obtaining a delay on its debt payments to the Fund.

"It's clearly not a course of action that would actually fit," she said, adding: "We have never had an advanced economy ask for payment delays."

"Payment delays have not been granted by the board of the IMF in the last 30 years," she continued at a news conference as the IMF and World Bank spring meetings were getting underway in Washington.

In cases in the past where it did happen, "that delay was not followed by very productive results."

With huge debt payments looming and lack of progress toward a new financing deal with the European Union, media reports said Athens had informally asked the IMF to be allowed to put off payments to the Fund.

Ms Lagarde said any such action was the equivalent of adding more financing for Greece, and that it would create an additional burden on Fund members, some of which are much more needy than Greece.

In her ‘Global Policy Agenda’, which sums up the Fund's main advice and actions for its 188 member countries, Ms Lagarde also warned that overreliance on currency depreciations to boost domestic economies could exacerbate global tensions over exchange rates.

The sharp rise of the dollar against the euro and yen is expected to be a major theme at the meeting of the world's top economic policymakers in Washington this week.

The recent currency moves have exposed some emerging economies as well.

"Excessive reliance on exchange rate depreciations to spur domestic activity could increase global currency tensions and should be avoided," she said.

The IMF has said the currency shifts are helpful on the whole, as they support the struggling economies in the euro zone and Japan, but could create winners and losers.

The US Treasury last week warned Europe against relying too much on exports, which have been spurred by a weaker euro, and also took South Korea to task for currency interventions.

More than two dozen central banks have further eased monetary policy over the last few months to support their economies or counter global deflationary pressures.

According to OECD calculations, countries pursuing monetary easing in the last few months accounted for roughly half of global GDP.

Ms Lagarde said the world still does not have a good system for helping countries in times of turmoil, as evidenced by recent exchange rate fluctuations and large capital flows and reserve accumulation in some emerging markets.

While regional financing arrangements, bilateral swap lines and the IMF's own loan programs have helped, they are still not well-coordinated, Ms Lagarde said.

"The global financial safety net remains underused during periods of turbulence, with uneven access and a multilayered structure," she said.

Meanwhile in other business news, an ECB survey of experts paints brighter euro zone outlook.

The closely watched Survey of Professional Forecasters have upgraded forecasts for growth in the next 3 years.

Economists and other experts surveyed by the European Central Bank pared back their predictions today for inflation to just above zero for this year as oil prices stay low.

But they expect it will pick up strongly in 2016 and beyond thanks to fresh money printing.

The closely watched Survey of Professional Forecasters upgraded forecasts for economic growth in the coming three years.

However, economists see only a modest improvement in unemployment in the years to 2017.

The low value of the euro, and the rollout of the ECB's money printing programme - known as quantitative easing - were credited with the longer-term improvement to inflation, a key measure of economic health.

While the group of experts, economists and academics expected inflation to remain almost stagnant this year, at 0.1%, they forecast a jump in 2016 to 1.2% and further progress over the longer term.

Despite this year's weak reading, they also did not expect it to slip into the red at any stage.

The predictions came a day after ECB President Mario Draghi pledged to rollout the bank's money-printing programme "firmly", as he painted a slightly more optimistic economic picture, saying that it would strengthen gradually.

The upbeat forecasts of the experts surveyed by the ECB further improves this outlook.

It also dovetails with another closely watched poll of banks this week, which showed firms' appetite for credit was expected to be strongest in over a decade in the coming months.

Draghi, describing speculation that the fledgling €60 billion a month scheme would be scaled back as "surprising", underlined his determination to see through quantitative easing until September 2016, or until inflation was back up to the bank's target of close to 2%.




ECB reaches money-printing target in first month

Posted 08/04/2015

The ECB has committed to buying €60 billion of assets a month with newly created money until September 2016

The European Central Bank bought almost €61 billion of government bonds and other assets in March, it said yesterday.

This just beat its target in the first month of a programme designed to revive the euro zone economy.

The ECB has committed to buying €60 billion of assets a month with newly created money until September 2016, or longer if needed to get inflation back on track to hit its target of just below 2%.

Purchases of public-sector bonds started on March 9, while those of other assets such as covered bonds and asset-backed securities began earlier.

An ECB spokesman said that for March alone, net asset purchases reached €60.953 billion. Weekly data earlier in March had already shown the ECB exceeding its purchase targets.

Figures for the week ending April 3 showed a fall in government bond purchases, but economists attributed this to reduced liquidity in bond markets in the run-up to the Easter holidays in western Europe, rather than a more permanent shortage of bonds.

Some economists had raised concerns that a shortage of bonds that met the ECB's purchase criteria could pose a problem.

Analysts said the asset purchase data coincided with upbeat data on financing conditions and confidence, which suggested QE was succeeding in lifting morale in the euro zone.

The ECB said it bought €11.5 billion of government bonds in the fourth week of its programme, down from €14.7 billion in the third.
Total purchases since March 9 stood at €52.555 billion.

The ECB said that in addition to the public-sector bonds, it had settled €64.670 billion in total covered bond purchases as of April 3, and €4.888 billion in purchases of asset-backed securities (ABS).

Both of those programmes were announced in September. Meanwhile from the economy that drives it all…

German orders mark weak start to 2015 with unexpected fall in February

Orders for goods made in Germany decreased by 0.9% in February.

German industrial orders unexpectedly dropped in February, partly because companies got fewer major contracts, after bookings already plunged in January.

Today's figures suggest that manufacturers had a subdued start to 2015 in Europe's largest economy.

Orders for goods made in Germany - a highly volatile indicator - decreased by 0.9% on the month, data from the Economy Ministry showed. A Reuters poll had forecast a 1.5% rise.

It was the first time since last summer that orders have slipped for two months in a row.

"Today's drop in new orders shows that after a series of almost euphoric news and indicators from Germany and euro zone, some caution is clearly justified," analysts said.

But they added that the weak euro should help German industrial firms.

The decline in new contracts was driven by a drop in demand for capital and intermediate goods. Bookings for consumer goods, which rose by 2.9% on strong demand from abroad, were the only bright spot.

A breakdown of the data showed domestic demand was stagnant, while demand from abroad dropped by 1.6%.

The Economy Ministry said the basic trend in industry was likely to remain "pointed moderately upwards" though.

Other evidence has painted a rosier picture of the sector, with a purchasing manager's survey last week showing German manufacturing expanded at the fastest pace in almost a year in March as output gained momentum.

Overall, Germany looks set for a decent performance in the first quarter, with business and investor morale improving, unemployment falling and the private sector gaining traction.

Consumer sentiment is at a 13 and a half high as shoppers benefit from rising wages and cheap oil.

The orders data for January was revised up to a fall of 2.6% from an originally reported 3.9% plunge.



Euro zone manufacturing picks up as weak euro boosts exports

Posted 01/04/2015

Manufacturing activity across the euro zone accelerated faster than previously thought last month, adding to signs the euro economy is recovering.

Any indication of a pick-up in growth will delight the European Central Bank, which embarked on a quantitative easing programme in March.

It is aiming to buy around €60 billion of bonds every month to drive up inflation and spur the recovery.

Markit's final March manufacturing Purchasing Managers' Index (PMI) was at a 10-month high of 52.2, beating a flash reading of 51.9.

It was the 21st month it has been above the 50 mark that separates growth from contraction.

"The final PMI reading signalled slightly stronger growth of the manufacturing economy than the preliminary reading, adding further to signs that the euro zone economy is reviving after last year's slowdown," said Chris Williamson, Markit's chief economist.


Chris Williamson, Markit's chief economistChris Williamson, Markit's chief economist

"March saw the sharpest increase in new export orders since April 2014. Companies reported that the weaker euro was the main factor driving new export orders higher," he added.

Speculation that QE was coming, and its eventual launch, has sent the euro down nearly 12% since January.

Euro zone factories have benefited as it has not only made exports cheaper but also meant competing imports were more expensive.

A sub-index measuring new export orders, which includes trade within the euro zone, jumped to 52.7 from February's 51.8.

This helped drive the output index - which feeds into a composite PMI due next week that is seen as a good growth indicator - to a 10-month high of 53.6.

Factories cut prices for the seventh month in a row to spur demand, but only marginally. Official data yesterday showed that euro zone consumer prices fell again in March, as expected, but the decline was the smallest this year.