When French President François Hollande (aka Mr. Flabby in the French press) announced just a few months ago while on a state visit to Japan that the EU recession was well and truly over (just before France plunged into arecession itself) he was slaughtered both by the French press and the foreign press around the world. But, maybe Mr. Hollande had been consulting the stars or looking into some economic crystal ball somewhere along the road to recovery, since it would seem that the lengthy (over lengthy, even) recession that has been the everyday living of the EU seems that it may be coming to an end after all.
A survey carried out on thousands of companies in the private sector are showing signs of recovery and that’s the first time in the past year and a half. Long Live François! Perhaps that means now he will pick himself up from the opinion polls that have dragged him into being the least popular President of France (yes, even more so than President Nicolas Sarkozy) with a rating that has been as low as just 25% in recent months. Although, sometimes, the EU might consider joining the snail-racing championships that are taking place in Congham, Norfolk, with added numbered race sticker on their backs (these Brits do quaint things sometimes, don’t they?).
Anyhow, the progress of recovery that is finally here is having just a little trouble getting off to a good start. Still, time might be money and if it is, the EU member states will be spending it together!
Some analysts believe that recession may come to an end completely this Fall according to Markit, which compiles the Purchasing Managers’ Index (PMI) every month. One economist (Chris Williamson at Markit) stated: “The best PMI reading for one-and-a-half years provides encouraging evidence to suggest that the euro area could, at long last, pull out of its recession in the third quarter”.
PMI in EU
The PMI rose from 48.7 points in May to 50.4 points in June and that turns out to be the best level since January 2012. 50 is considered to be the figure that sees growth occurring in the economy. So, despite the fact that the progress is pretty slow, it is coming (so we are told). The Eurozone has seen the economies of member states shrink and that has been happening since the last quarter of 2011, but figures that will be published next month will show if the trend is continuing or if it has been halted and turned around. Economic output was reported to have fallen by Eurostat in the first quarter of 2013 by 0.2%, with Spain and Italy shrinking as well as the economies of France and the Netherlands.
Just a few months ago in May, we were being told that the future of the EU was going to be a dark and bleak one. France had a 0.2% fall in Gross Domestic Product in the first quarter of 2013, while the Netherlands suffered a 0.1%-shrink in its economy. Germany didn’t do as well as had been expected and only grew by a meager 0.1%. But, is that all over now with the new data that has been released? One person will, at least, be rubbing his hands together in gleefully blissful ‘I-told-you-so-attitude’!
One must not forget that despite the seemingly positive figures, unemployment is still enormously high (especially concerning youth unemployment). Consumers have limited spending power still in the EU and the austerity measures being imposed on countries like Portugal and Greece will not help the growth situation. Although it seems likely that the EU has at long last realized that kicking a man when he is already on his knees will only have the added bonus of completely eliminating him. The EU has freed Italy from fiscal monitoring and France, Spain and the Netherlands saw the EU wave the obligation to have a 3% annual-deficit limit. That might be a clearer sign that things could actually finally improve in the EU.
Despite the report that shows some good signs of the recovery actually checking in at Hotel EU just before the holiday season starts, let’s wait until we see it running through the finish-line tape and being the winner in that race before we crack open the Champagne. But, damn, didn't British Prime Minister David Cameron just agree to hold a referendum on the withdrawal of the U from the EU? Oh, well, Mr. Cameron, I'm sure you can pull this one off and change the 'Yes' into a 'No' for pulling out now the recovery is perhaps here.
Originally posted: EU Recession Over? Believe it or not?