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Fortunes mixed for euro zone

Tuesday, May 05, 2015 - 02:03

More positive signs for the euro zone as the European Commission lifts its growth outlook and Spain's employment rate shows a sharp jump. But the struggle to reach a deal on Greece's debt goes on with no sign of a breakthrough, and concern mounts over France. David Pollard reports.

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France on the world stage. Monday's signing of a six billion euro dollar fighter jet deal with Qatar a round of applause for French export know-how. At home, rather less celebration. Its own central bank chief, Christian Noyer, now warns growth must do better. In comments made just a day after manufacturing data showed a contraction for a 12th month. Joe Rundle of ETX Capital is one of many who agrees. SOUNDBITE (ENGLISH) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING: ''France is single-handedly the biggest risk to the euro zone economy. The whole French economy is slowing down, it's not efficient, there's too much social spending.'' But not all of France's problems are French, says Rundle. Germany's manufacturing dipped in April. That a reflection, possibly, of a two-tier European recovery that suits its biggest exporter. SOUNDBITE (ENGLISH) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING: ''I think the euro zone, despite the data, will recover at a pace set by Germany. It's in the Germans' interest for a very slow recovery of the euro zone because it keeps the euro artificially weak.'' A low euro may of course favour Greece - if it's still in it. Its next debt repayment is looming - just a week now until a one billion dollar bill becomes due - and talks with creditors show no breakthrough. Greek stocks and bonds have been in a sell-off - markets rattled by reports the IMF may cut funding to Greece unless European partners accept debt write offs. Though that's been rebutted by German finance minister Wolfgang Schaeuble - who sees no immediate sign of a deal. SOUNDBITE (GERMAN) GERMAN FINANCE MINISTER, WOLFGANG SCHAEUBLE, SAYING: "I am somewhat sceptical whether a deal can be reached on Monday. But I cannot rule that out." There's little surprise that in its latest projection, the European Commission's slashed its growth outlook for Greece to just half a per cent this year. Compare that to two and half per cent pencilled in, just three months ago. Euro zone growth, it says, will though be stronger overall. And Spain is giving cause for hope: new jobless numbers show a drop of 2.7 per cent - the biggest fall in unemployment on record for an April month.

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Fortunes mixed for euro zone

Tuesday, May 05, 2015 - 02:03