Euro crisis is not over says Bundesbank chief as UK slides closer to triple-dip recession
Jens Weidmann the chief of the German Bundesbank told a news conference that the Euro zone crisis is not over and that governments must do more to tackle the root causes of the crisis and added that France’s reform plans has lost its way.
“The crisis is not over despite the recent calm on financial markets,” Weidmann, a member of the European Central Bank’s policymaking Governing Council, told a news conference to present the Bundesbank’s 2012 results.
There was uncertainty about the reform course in Italy and Cyprus, he said, adding: “The reform course in France seems to have floundered”.
Weidmann also warned that the German economy is still shaken by the impacts of the Euro zone crisis and that the regions continuing problems pose the biggest threat to the German economy.
“Only some of the confidence lost as a result of the crisis has been recovered so far,” Weidmann added. The optimism generated last year by European Central Bank governor Mario Draghi has wavered since the start of 2013 as the majority of Eurozone country’s slid into recession and political uncertainty in Italy and across Europe dragged down belief in a recovery.
The UK meanwhile has added to the European Union’s woes after its latest manufacturing data came in far below economist expectations.
Philip Shaw of Investec said; “The manufacturing figures are appalling. They represent a very poor start to 2013 for the factory sector. This may be a snow story once again, but one should be wary about putting too much to blame onto weather conditions. Our view is that the UK will probably avoid a triple-dip recession but these figures hardly inspire confidence in that view.”
The decline in manufacturing fell at its fastest pace since June 2012.
Chris Williamson of Markit said; “The data will pile more pressure on the Bank of England, to inject more stimuli into the economy at its next policy meeting, and on the chancellor, to accept that more needs to be done to boost growth in next week’s budget.
‘With such a weak start to the year, the economy is facing an increased risk of falling into a triple-dip recession and the much-vaunted re-balancing remains elusive. In fact, recent data suggest the UK is moving in the opposite direction: away from goods production and is becoming ever-more dependent on consumer spending.”
As a result of the disappointing data the Pound has plummeted once again against the US Dollar and Euro with the possibility of Sterling dipping to a low of 1.38 against the single currency (GBP/EUR).
Current Euro exchange rates
As of 11:10 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8750
The Euro to US Dollar exchange rate is currently trading in the region of 1.3006
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2624
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5775