European crisis deepens, households uses their savings
On 30 October, Eurostat announced various figures for the economic outlook of European economy. Compared with the first quarter of 2012, household’s savings decreased in the Eurozone area by 0.5 percent during the second quarter of 2012. Saving rate, in EU27 remained stable.
According to the press release, the reason behind the savings fall was because of the negative contribution in wages, taxes and rise of prices. Social benefits contributed positively in restraining the decline.
In addition business climate indicator continued to decrease by 0.28 points to 1.62. Manager’s production expectations also worsened. According to the press release, “the decline was driven by markedly worsened assessments of order books and past production.”
The figures above explain the economic sentiment indicator (ESI) decline in the Eurozone area. Confidence in industry and construction continued to worsen, and outweighed the improvement in the retail sector. Services confidence remained unchanged. However, in EU27 ESI was stable.
The good news for EU economy came from the Business investment rate which didn’t fall in the euro area and increased in EU27. Compared with the first quarter of 2012, business profit share remained stable and gross investment rate for non-financial corporations increased by 0.2 percent in EU27. In the Euro area, the profit share remained stable at 38.1 percent.
In the same time, French CEOs called their government to proceed in huge cuts to welfare charges. “For companies, operating costs must be reduced by at least €30 billion over the next two years by cutting the employers’ portion of welfare charges,” CEOs said in an open letter to the government. NEW EUROPE
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