European Leaders to Meet Amongst Growing Divisions

On Wednesday Europe’s leaders will gather in Milan for their on-off-on-again summit on jobs and growth.

Expectations are low. The meeting is very much the idea of the Italian Prime Minister, Matteo Renzi, wanting to demonstrate to a domestic audience that he is at the forefront of the struggle to cut Europe’s unemployment numbers.

Even as the leaders discuss how to boost growth, what will be impossible to disguise are the deep divisions within the eurozone – and that is Europe’s central drama this autumn.

Germany has proudly announced that it is running a balanced budget. In contrast France and Italy are not just struggling with their budgets; they are threatening to flout the EU’s budget rules. “France makes its own rules,” says its Prime Minister Manuel Valls. The European Commission may well challenge that assertion.

Let’s take the case of Italy. It has torn up its own forecasts. Growth this year will be -0.3%, compared with a predicted figure of 0.8%. Growth next year will be a tepid 0.6%.

Italy’s level of industrial production has fallen by a quarter in the past six years. Unemployment remains stubbornly high at near 12%. Its budget deficit is increasing, although the government says it will stay under 3%.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza