French President Francois Hollande says a deal to start building a “banking union” on January 1 will “speed up” economic integration.
EU leaders agreed to set up a single banking supervisor for the 17-nation Eurozone. The move is seen as the first step to an entire European Union wide banking union. Continue reading
The European Union has launched a new permanent fund whose sole purpose is bailing out endangered economies.
The European Stability Mechanism (ESM) will have the ability to lend a nation up to 500 billion euros ($650 billion U.S.) starting in 2014. The ESM will phase out the European Financial Stability Facility. The group will be headed by the Prime Minister of Luxembourg. Continue reading
Unemployment in the Eurozone has risen to 18.2 million after releasing economic data for August. The rate of unemployment remained the same after the rate for July was revised upward at 11.4%, however there was an increase of 34,000 out of work in the month.
The highest unemployment rate for an individual nation was Spain where one out of four eligible workers are unemployed. Austria had a rate of 4.5%. The rate in Germany, the Eurozone’s most stable economy, was 5.5%. Continue reading
The economy of the Eurozone shrank .2% in the second quarter of the year compared to the previous quarter. The economies of the full 27 European Union member nations also fell .2% during the second quarter.
The Eurozone and the EU are technically not in a recession due to the definition of recession requiring two straight quarters of negative growth and the first quarter of the year had zero growth. However, economists are pessimistic about the rest of the year and believe a recession is likely. Continue reading
Europe’s manufacturing saw the 11th consecutive month of contraction in July. Despite an increase of .1 in the index from 46.4 to 46.5, the overall amount is still below the 50 level that indicates no growth.
The services sector rose to 47.9 in July, an .8 increase from June but all sectors reported lower levels of output in the month. Continue reading
On the same day that Italy’s prime minister proclaimed he could see a “light at the end of the tunnel” for the Eurozone debt crisis reports surfaced that the unemployment rate is at a record high.
Italian Prime Minister Mario Monti met with French President Francois Hollande in Paris for discussions on the euro. Hollande agreed their had been “significant progress” in recent weeks and that the euro should be “defended, preserved and consolidated.” Continue reading
Germany’s AAA credit rating is in danger of a downgrade after Moody’s changed the outlook for the nation’s credit to negative. The move is a possible first step into downgrading the country’s overall rating.
Moody’s stated that the exit of Greece from the Euro is increasing and the increasing financial decline in Spain. A full bailout of Spain is considered to be more likely as the cost of Spanish bonds remains at a record high. Continue reading
Spanish Prime Minister Mariano Rajoy announced the country’s sales tax would rise from 18% to 21% and that local governments would have their budgets significantly cut in an attempt to appease Eurozone regulators after the country requested a financial bailout.
Rajoy’s plans state it should save the country $80 billion. Continue reading
The leaders of the European Union have agreed to a deal that would allow bailout funds to go directly to struggling banks instead of the governments of member nations.
They also created a joint banking supervisory board after meeting for 13 hours. Continue reading
Ratings firm Finch has cut the rating of the country of Cyprus to junk status. The cut is believed to be in response to Cyprus banks holding much of the real estate debt of Greece.
Fitch states that Cyprus will need at least 4 billion euros to support its banks on top of 1.8 billion euros needed to recapitalize its lender Cyprus Popular Bank. The bank needs and the junk rating will make it almost impossible for the country to borrow from international markets. Continue reading