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

For Lebanon-based Refugees, Desperation Fuels Perilous Passage

In a war that has caused an estimated three million people to flee Syria, efforts to make perilous sea journey in search of asylum expected to increase More

South African Brewer Tackles Climate Change

Mega-brewer SAB Miller sent delegates to climate summit in Peru, says it is one of many private companies taking their own steps to fight climate change More

Indonesia Reports Increase in Citizens Joining Islamic State

Officials say more than 350 of its citizens are now in Syria or Iraq to fight with Islamic State - 50 more than last month More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Will Pakistan School Shooting Galvanize Pakistan Against Extremism?i
X
Ayesha Tanzeem
December 17, 2014 11:54 AM
The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video Will Pakistan School Shooting Galvanize Pakistan Against Extremism?

The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video Turkey's Authoritarianism Dismays Western Allies

The Turkish government has been defiant in the face of criticism at home and abroad for its raids targeting opposition media. The European Union on Monday expressed dismay after President Recep Tayyip Erdogan lashed out at Brussels for criticizing his government's action. Turkey's bid to be considered for EU membership has been on hold while critics accuse the NATO ally of increasingly authoritarian rule. Zlatica Hoke reports.
Video

Video US-China Year in Review: Hong Kong to Climate Change

The United States is pushing for a code of conduct to resolve territorial disputes in the South China Sea as it works to improve commercial ties with Beijing. VOA State Department correspondent Scott Stearns reports on a year of U.S. policy toward China from Hong Kong to climate change.
Video

Video Japanese Leader’s Election Win Raises Potential for Conflict with Neighbors

Japan’s Prime Minister Shinzo Abe and his allies easily won a two-thirds majority in parliament Sunday, even though the country has slipped into recession under his conservative policies. VOA’s Brian Padden reports from Seoul, that the prime minister’s victory will empower him to continue economic reforms but also pursue a nationalist agenda that will likely increase tensions with Japan’s neighbors.
Video

Video Nuba Mountain Families Hide in Caves to Escape Aerial Bombings

Despite ongoing peace talks between Sudan's government and the rebel Sudan People’s Liberation Movement-North, or SPLM-N, daily aerial attacks continue in South Kordofan province’s Nuba Mountains. Adam Bailes was there and reports for VOA that government forces are targeting civilian areas, rather than military positions, with their daily bombardments.

All About America

AppleAndroid