It’s a mix week as far as European news goes. The European Union’s economy is showing increased strength, which is certainly good news for workers and businesses alike. Yet while the economy is picking up steam, politics is only growing more complicated. EU members are toughening their positions on Brexit, while the Greek debt crisis is threatening to reemerge.
First, however, let’s go through the good news. Eurozone retail sales grew by a solid 1.9% in February, following a .7% gain in January. Retail sales are especially important because for most fully-developed economies consumer consumption is equal to 50 to 70% of the economy. This is true for most Western European countries. Growing retail sales can result in stronger economic growth, rising wages, and stable inflation.
In fact, signs are pointing to just that: the economy does appear to be growing at a faster rate. The Purchasing Manager’s Index (PMI) for the Eurozone rose to 56.4 in March, up from 56 in February. This high reading actually represents the highest reading for the European Union’s economy in the past six years! Any reading above 50 indicates growth.
As far as the European Union’s economy goes, it appears to be at its strongest point in several years. Arguably, it hasn’t been stronger since before the Great Recession.
Greece Debt Crisis Coming Back?
A few years ago Greece was dominating the global headlines for all of the wrong reasons. Years of lax public leadership had lead to a massive accrual of public debt. At one point, in 2014 debt exceeded 180% of the economy. Since then it has declined slightly to about 176%. Greece has been one of the biggest threats to European Union’s economy.
Last week, Greek Prime Minister Alexis Tsipras is warning that an emergency meeting may bee needed soon. If an agreement cant be reached between Greece and its lenders by Friday, the Greek crisis could roar back into the headlines. Luckily, lenders and Greek leaders were able to reach an agreement, for now. However, the deals remain short-term and in many ways kick the problems down the road.
Lenders and other European Union countries have been tough in regards to their demands on Greece. Global authorities have enforced strict austerity measures and have demanded steep spending cuts. The Greek people have struggled to cope with these cuts and discontent has been rising.
At least for the moment, however, Greece looks somewhat stable. This, in turn, will provide stability for the European Union’s economy.
European Parliament Looking to Punish United Kingdom?
Let’s not kid ourselves, there’s been a lot of bad blood between the British government and the European Union government over the past several months. To say that the EU was “miffed” but the United Kingdom’s decision to leave the Union would be an understatement. Many leaders have been flat out angry.
It shouldn’t be all too surprising then that the European Parliament voted to add more demands to the main principals of the withdrawal. The parliament doesn’t have a direct role in negotiations, but does have to give its consent for the “divorce” to be final.
The United Kingdom is expected to have to pay northwards of 50 billion euro to leave the Union. This bill is for unmet obligations. The UK leaving will be a blow to the European Union’s economy, However, it’s best for all parties either way if they leave on good terms.