Browsing all articles tagged with Angela Merkel

German Economy to Pick up Although Fall Short of Traditional Pace

Germany’s economy will recuperate from a bout of winter weakness however fall well short of the dynamic growth rates of previous years as euro zone recession and global slowdown stunt investment and exports.

There are homegrown problems too. What hue of government will result from September elections is injecting doubts and foreign investors cite worries regarding over-regulation and Germany’s future energy mix after Chancellor Angela Merkel turned her back on nuclear power.

Europe’s paymaster was long flexible to the euro debt crisis but contracted at the end of previous year and only eked out meager growth in the first quarter.

The Bundesbank stated this week a solid second quarter recovery was in prospect. Construction is expected to bounce back following a harsh winter and private consumption will grow thanks to low unemployment inflation-busting wage boost and low interest rates.

Although even the government forecasts just 0.5 percent growth in 2013 and economists doubt German companies will start investing heavily in the short term.

Christoph Schmidt, head of the German Council of Economic Experts, nobody expects strong growth for this year now particularly as the first quarter was so sobering, advisors to the government known as the wise men.

The economy grew just 0.1 percent in the first quarter following shrinking 0.7 percent in the previous three months of 2012.

Schmidt said trade will not contribute much, it could even drag on growth so that leaves domestic demand, private consumption is comparatively stable however investments are restrained and the key question will be when and how much they pick up.


IMF, ECB Square off in Europe Severity Debate

An intense debate about Europe’s austerity drive flared back into life on Thursday with leading IMF and European Central Bank officials harshly at odds and Angela Merkel declaring that Germany required superior interest rates.

With the threat of the currency bloc’s break-up retreating; some euro zone officials are saying currently is the time to throttle back on debt cutting drives as calmer financial markets will not react badly.

The International Monetary Fund is also pushing that prescription for both the Britain and euro zone however Germany and the ECB are opposed.

IMF First Deputy Managing Director David Lipton told a conference in London that there is a risk that Europe could drop into stagnation, which would have very serious implications for households, banks, companies and other bedrock institutions.

He further said that to decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth.

However at the same conference, the Economist’s Bellwether Europe Summit, ECB Executive Board associate Joerg Asmussen urged governments to push on with budget consolidation and reforms.

Asmussen said delaying fiscal consolidation is not a simple way out. If it were, we would have taken it; holdup fiscal consolidation is no free lunch. It means superior debt levels and this has real costs in the euro area where public debts are already very high.

The ECB is expected to cut interest rates coming week, even though a quarter-point reduction is unlikely to lift the euro zone economy out of recession.

Lipton said it will perhaps require additional unconventional measures from the ECB, as Asmussen said monetary policy was not an all purpose weapon.

The ECB is in a difficult position, for Germany it would really have to lift rates slightly at the moment, however for other countries it would have to do even more for more liquidity to be made available, she said at a banking conference, in a strangely outspoken comment on central bank policy.


German Court to Hear Case Against ESM, ECB bond-buying in June

Germany’s Constitutional Court said on Friday that it would hold a public hearing on complaints against the euro zone’s bailout fund the European Stability Mechanism, and the European Central Bank’s bond buying program on June 11 and 12.

The seven complaints in total, reflect German unease regarding the mounting costs of dealing with the three year debt crisis and fears that the ECB bond buying program may violate the taboo against direct central bank financing of state budgets.

The court based in Karlsruhe southwestern Germany, ruled in a preliminary verdict previous September that the ESM did not violate German law and could go further on, while it insisted on veto rights for the German parliament.

The ECB has not yet trigger the program as struggling euro zone states, previously implementing tough austerity measures, are reluctant to recognize the onerous conditions of the program, however the pledge alone has been enough to bring down their borrowing costs over recent months.

Gunnar Beck, constitutional law expert said he did not expect Karlsruhe to support the complaints, given its precedent record on not blocking moves towards European integration, despite the legal worries over the bond buying program.

There is no doubt that the EU contract, rule out bond purchases whenever they might facilitate state financing through the printing press and permit indebted states to obtain enhanced rates than they would otherwise.

There is no significant precedent where the German constitutional court has directly challenged the German government over an issue of European policy.

He added, I have no doubt the court will present to the government’s wishes in one form or another when it comes to the ECB bond purchases.

Political analysts say a decision is unlikely earlier than Germany’s September election when Chancellor Angela Merkel, her popularity enhanced by what voters see as her competent handling of the euro zone crisis is expected to win a third four year term.


Italy and France See Leeway on Budget Rules At EU Conference

Italy and France won support for a somewhat further growth friendly explanation of European Union budget rules at a meeting on Thursday following French President Francois Hollande challenged German driven fiscal austerity.

The 27 EU leaders agreed following discussion how to overcome recession and mass unemployment unleashed by three years of the euro zone’s sovereign debt crisis, to allow superior scope for public investment when reducing government deficits.

The potential’s presented by the EU’s existing fiscal framework to balance productive public investment requirements with fiscal discipline objectives can be exploited in the defensive arm of the Growth and Stability.

Exceptions would have to be permitted by the euro zone states and executive European Commission, however Italy’s and Hollande Europe minister drew support from what they depicted as a concession.

The Socialist French leader said that they were summiting their deficit reduction commitments however in a way that does not challenge our objective of growth.

He further said that’s the discussion that is now going to start with the Commission and the leadership we were given today permit us to approach this discussion with confidence.

Germany, the leading stickler for fiscal regulation, is worried that any straying from the course of deficit reduction will lift debt burdens and reignite financial market turmoil.

However Chancellor Angela Merkel avoided any clash with France, they made clear in a very consensual conversation that structural reforms, budget consolidation and growth are not in contradiction however are mutually reinforcing.

Hollande recognized this week that France’s budget deficit would strike 3.7 percent of GDP this year, omitted the 3 percent it had promised EU partners because of flat economy. That illustrate criticism from Germany’s central bank chief who stated French economic restructuring seemed to have floundered.


German lawmakers Approves Revised Bill on Greece Aid

German Parliament approved Greece’s current rescue package as Finance Minister Wolfgang Schaeuble cautioned that a default in the country where the debt crisis started could generate the collapse of the single currency.

Schaeuble stated in a speech to the Bundestag in Berlin that the potential effects of a Greek default on other euro states would be critical in truth the penalty would be unpredictable. It could activate a process at the end of which the entire euro zone could break apart.

The channel caps a year in which Chancellor Angela Merkel has had to pack down criticism within her ranks over shifts to Greece and suppress calls to force out the country from the euro.

Officials in Merkel’s coalition and opposition leaders this week mention the agreement in Brussels to give Greece additional time to meet budget targets. The agreement met Germany’s condition on ruling out a debt write off for Greece that would be experience by creditor countries taxpayers.

Evaluating Greece with eastern Europe following the collapse of the Soviet Union, Schaeuble said crisis hostility efforts are working as European leaders drives through a new package designed to ease terms for bailout aid for Greece and help to resolve the three year old debt crisis.

Unemployment in the euro zone increased to 11.7 percent from 11.6 percent in this September, according to the European Union’s information office.

Schaeuble said that the Greek population has had to tolerate a heavy burden. However if the Greek people are prepared to carry the burden, we were ready to help.


European Union Leaders Agree On Bank Omission Amid Angela Merkel Questions

German Chancellor Angela Merkel stated it’s an open question whether European policy makers can rally the deadline that they set hours prior to launch a Europe-area bank supervisor from the end of year.

Merkel informed reporters following a two day EU meeting in Brussels wrapped up today that there are problematical questions to simplify and we will distinguished in December that they complete it or not, for now, the political will is there.

The supposed banking union dominated meeting at the 20th crisis hostile European meeting, pinning down a method that French President Francois Holland and Merkel worked out on Friday prior to the chief’s assembly. Leaders admired Greece for its budget cutting efforts intended at securing it’s subsequently aid installment. They avoid questions of how and when Spain might secure additional assistance.

The remarks highlighted Germany’s go slow reached that may confuse plans laid down in June to split the relation among governments and banks that has deteriorate the region’s debt crisis. She also ruled out allocating Spain to shift bank bailout loans off its balance sheet if they are completed prior to the new system starts in use.

The ECB is placed to become the community main financial supervisor by Jan. 1, elevated the outlook of direct aid to Spain’s banks throughout 2013, the 27 EU leaders decided at the meeting. The system will segment in and could cover all 6,000 Europe area banks by Jan. 1, 2014.

Mariano Rajoy, Spanish Prime Minister stated that he is not facing stress to seek a sovereign rescue and he would not take any such pressure into description in any case. Spain previously has secured a 100 billion Europe which is equal to 130 billion dollar financial sector support and has so far not required asking for aid that would release ECB bond buying.

The EU leaders guarantee to make certain that the particular administrator won’t put countries outside the euro area at a weakness. They said non Europe nations that link the supervisory structure can obtain reasonable representation and treatment, and concentrated technical work in this area will continue.


Analysts Increasingly Believe Greece Has Future In Euro Zone

Consecutive debt upset from Greece have so far failed to blow separate the political bonds that hold it in the euro zone, influencing increasing numbers of economists to change their minds and conclude that the country’s chance lies within the currency union rather than out.

Polls over the last few months recommend that the Greece’s euro zone membership has become more secure. The absolute magnitude of Greece’s crash has contributed to a developing sense that slight remains, in economic terms that would strengthen lenders to stop funding to Greece and boot it out the euro zone.

For economists, future of Greece’s in the euro zone is no longer an economic question however one of political determination, which remains firm in Brussels and Athens, in spite of resistance from politicians in Germany. Now there is a strong agreement that Greece will still be in the euro zone in 12 months, with 45 out of 64 economists polled previous week in agreement.

Lena Komileva of independent research consultancy G+ Economics said that specifying the unexpected pressures on Greece’s credit within the euro zone, the influence of the political factor should not be undervalued.

Jean-Claude Juncker, the Euro group President said that Greek exit would be convenient, however not desirable, while German Chancellor Angela Merkel has come under growing pressure from her own alliance to force Greece out.