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Germany starts spending, others stumble

Wednesday, January 29, 2014 - 01:44

Jan 29 - German consumer morale unexpectedly rose to its highest level since August 2007 going into February, as shoppers became more upbeat about the outlook for Europe's largest economy and low interest rates encouraged them to spend rather than save. Joel Flynn reports.

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It's a country not known for its spending. But German shoppers seem to be opening their wallets again. Consumer morale has risen to its highest since the summer of 2007 Low interest rates and optimism about the outlook are making the tills ring. Chancellor Angela Merkel said the Europe's largest economy was showing signs of rude health. SOUNDBITE: German Chancellor, Angela Merkel, saying (German): "Our strong budgetary situation is a result of good economic development and the millions of workers and companies who contributed to it. It has led to a new record in tax revenues, which is why politicians are obliged to show we can get by with what we earn and without tax increases." Good news in Germany then, but not so for other parts of the euro zone. Spanish retail sales fell at their fastest rate in four months in December, proving its tentative recovery has yet to take hold. They were also down almost 4% across the whole of 2013. In Italy, manufacturing morale this month unexpectedly fell for the first time in nine months. The two year recession there showing little sign of abating. NAB Group's Tom Vosa. SOUNDBITE: NAB Group Head of Market Economics, Tom Vosa, saying (English): "I think within the core we're seeing a bigger divide between Germany and the rest, maybe German and Austria sort of leading the pack, and certainly France and the Netherlands well behind, and we are beginning to see a bit more strength in the periphery if we except Greece from that, so we're now getting into a multi-speed Europe, rather what we had last year, which was a two-speed Europe, with a stronger core and a weaker periphery." The spotlight is off the euro zone for now thanks to the emerging market turmoil. But with such a mixed economic picture it's unlikely to stay that way for long.

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Germany starts spending, others stumble

Wednesday, January 29, 2014 - 01:44