The European Central Bank October 2014 Monthly Report makes scary reading
I’ve just had a look over the report and I’m getting very scared that the ECB are on a knife edge. I was already a little scared but now the fear is increasing.
They are still pinning their hopes on factors that either haven’t happened so far or won’t even remotely lead towards building the foundation of growth.
Here’s the key lines to what they say about 2015;
- the outlook for a moderate recovery in the euro area remains in place
The outlook was getting worse last time I looked. They’re queuing up to cut German growth, Italy is in recession, Spain’s worried about its growth spurt already faltering and France is still going backwards
- Domestic demand should be supported by the monetary policy measures
Rates are at their lowest, you have to pay to park money at the ECB, LTRO’s, countless EU initiatives, TLTRO’s, and what’s changed, one little jump in retail sales?
- the ongoing improvements in financial conditions
Nope, I can’t think of any
- the progress made in fiscal consolidation and structural reforms
Hahahahahaha. No, seriously, hahahahahaha
And here’s the real kickers
- lower energy prices supporting real disposable income
Let me get this right, Europeans are better off because their utility bills and what it costs to fill the car up might come down? Dont’ get me wrong, every little helps but to suggest people are going to be better off because of something completely out of anyone’s control is ludicrous. If they had sold it on a better growth aspect for business, because transport companies and producers can reduce costs making them more competitive helping to boost exports, I could have gone along with that. One major kick off in the Middle East or with Russia over gas supplies and you can kiss your ” lower energy prices supporting real incomes” line goodbye
- Furthermore, demand for exports should benefit from the global recovery
What global recovery? We’ve just had two major world organisations cutting growth or showing that it’s weakening. Japan is still trying to find a pulse, the UK is seeing an H2 slowdown, and while the US is picking itself up off the floor the manufacturing and production data is starting to slide. Lastly there’s China who could still see growth slipping, especially with the rest of the world not looking too hot.
Maybe I’m being to harsh on the ECB. It’s not their responsibility to drive European growth but they’ve been forced to pick up the baton while the member states dither and stick their heads in the sand.
And that is where the problem lies. For all the problems we had in the US, the UK, Japan, efforts have been made at government level to try to change things. Whether you agree with what they’ve done is partly irrelevant, something was done which is better than nothing being done. Europe hasn’t done enough and they’re going to pay the price for it. That’s very very worrying for someone whose country sits just over 20 miles away from them.
Once the ECB tool box is empty it’s game over for Europe. 2015 is going to be a very big year and possibly another ‘make or break’ one for the eurozone.
The clock’s ticking
