News / Europe

EU Claims That Crisis Is Over Premature, Analysts Warn

EU Claims That Crisis Is Over Premature, Analysts Warni
X
February 12, 2013 3:22 AM
European financial markets were mixed Monday after the budget deal struck by EU leaders Friday, which will see overall spending cut for the first time. Several European leaders have suggested in recent weeks that the continent is emerging from the euro crisis. But analysts warn politics could be about to blow the fledgling recovery off course. Henry Ridgwell reports from London.

EU Claims That Crisis Is Over Premature, Analysts Warn

Henry Ridgwell
— European financial markets were mixed Monday after the budget deal struck by EU leaders Friday, which will see overall spending cut for the first time. Several European leaders have suggested in recent weeks that the continent is emerging from the euro crisis. But analysts warn politics could be about to blow the fledgling recovery off course.  Henry Ridgwell reports from London.

The budget deal agreed to after marathon 25-hour talks in Brussels will see total EU expenditures cut by $45.9 billion or 34.4 billion euros over the next seven years.

It was seen as a victory for those EU leaders who had demanded that austerity at home be matched by cuts in Brussels, like British Prime Minister David Cameron.

“There are lots of people who wanted to push it up, and at last someone has come along and said this has got to stop.  It is time for that credit card limit to go down,” Cameron said.

The euro has gained 6 percent against a group of other currencies over the last six months. That’s a good sign, says European Central Bank President Mario Draghi.

“The appreciation is, in a sense, a sign of the internal confidence of the euro,” Draghi said.

Analysis by the Dutch bank ING showed almost $134 billion or 100 billion euros in private funds flowed back into eurozone periphery countries in the last four months of 2012.  That marks a big turnaround from a year ago when fears of a capital flight stalked the eurozone.

“We’ve seen the banks in Spain and Italy benefit from that, and there has been more of a willingness to take on the riskier trades of lending to the periphery nations,” said Louise Cooper. a a financial analyst and author of the CooperCity blog.

Periphery countries like Greece and Spain are still struggling with low or negative growth and spiraling unemployment.
 
Cooper says claims by European leaders that the debt crisis is over are far too premature.

“Progress is being made, but at a snail’s pace. Even though we have a big rally in equity markets - or had a big rally in equity markets - in the first few weeks of January, it was actually on quite small volumes,” Cooper said.

Italy has an election on February 24 with former Prime Minister Silvio Berlusconi climbing in public opinion polls. Meanwhile, the party of Spain’s Prime Minister Mariano Rajoy is engulfed in corruption allegations.

“Politics is one of the black swans of the eurozone this year. In Italy we could have political uncertainty, perhaps the return of Silvio Berlusconi. In Spain, we don’t know where the current scandal surrounding the Prime Minister will go.  All of these sorts of things have the capacity to unsettle markets,” said Philip White, who is with the Centre for European Reform.

White adds that the big test for Europe this year comes in September with the German elections, when Chancellor Angela Merkel will face a tough battle to remain the leader of Europe’s biggest economy.

You May Like

Video On the Scene: In Gaza, Darkness Brings Dread and Death

Palestinians fear nighttime raids, many feel abandoned by outside world, VOA's Scott Bobb reports More

African Small Farmers Could Be Key to Ending Food Insecurity

Experts say providing access to microloans, crop insurance, better storage facilities, irrigation, road systems and market information could enable greater production More

University of Michigan Wins Solar Car Race

Squad guided its student-designed solar-powered vehicle to fifth consecutive time victory in eight-day bi-annual American Solar Challenge More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid