Italy and Germany Slipping as Euro-Zone Recovery Attempts to Take Hold


Starting a few years ago, several countries within the European Union (EU) were placed under direct scrutiny to determine causes of debt and attempt to reconcile the issue through various bonds being sent. While Greece and Spain were the hardest hit initially, other countries are beginning to feel the effect, specifically Italy and Germany.


Starting a few years ago, several countries within the European Union (EU) were placed under direct scrutiny to determine causes of debt and attempt to reconcile the issue through various bonds being sent. While Greece and Spain were the hardest hit initially, other countries are beginning to feel the effect, specifically Italy and Germany. While Italy was initially targeted, especially when it slipped into a recession in 2012, it has been gradually improving, until numbers were released for the last quarter.

Despite the efforts of the euro-zone recovery, Italy’s GDP numbers were lower by two tenths of a percent, while Germany’s factories are seeing fewer orders than ever before.

Forecasted Numbers versus Reality

While some economists and analysts have determined this is just a passing issue that will soon be recovered once the euro-zone recovery takes hold in both Italy and Germany. At the same time, other economists are blaming the current state of the geopolitical world. Events between the European Union and Russia as well as the Ukrainian crisis have caused a significant amount of uncertainty, which can have a direct effect on consumers’ decisions.

But there are plenty of financial experts who blame Europe’s high taxes, socialist policies, free health care, and so on for their anemic and pitiful economies.

These geopolitical issues most directly affect Germany’s factories since it is causing a decrease in the number of orders received. Additionally, the overall rate of production and retail prices have not rose to the numbers economists were hoping to achieve, even though they seem to still hold steady during seasonal events.

Some of these statistics have analysts worried, but others site numbers from Halifax Bank, showing a housing price increase that should help to offset any deflationary spiral. However, that does not mean the European Union is out of the woods just yet. Rather, the European Central Bank is having to maintain its benchmark rate at the lowest position it has ever maintained, 0.15%.

The Potential Outcome

As these economic issues continue, be it from issues with debt or the consistent geopolitical uncertainty now present at regular intervals, analysts are keeping a close eye on the use of stimulus money in order to determine where the European economy is headed. Right now, it could go either way contingent on the progress of the individual nations, especially Italy and Germany. Unfortunately, Germany’s bonds have fallen to all time low and Italy returning to a recession has created a rise in the long-term bonds they are holding.

With all of the numbers coming in, analysts have been left wondering what they read wrong instead of nodding in approval as the numbers come their way. During the 2014 year, the European Union’s individual nations should be seeing growth rather than a continuation of the economic difficulties they have suffered for the past several years. But other people disagree with this. The EU does not treat businesses well and their high taxes do not spur investment, rather they undermine it and push it overseas. Like Chicago, LA, and Detroit, the EU’s economy may never be what it could be.

The EU is in Trouble

With some luck though, the euro-zone recovery efforts will take hold in all of the nations where the current economy is affected. With their socialist policies, dependence on Russian energy and Russian expansionism, unimpressive militaries, the EU is more likely though to be headed towards a downward spiral.

 

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