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More jeers than cheers in Europe's core

Monday, October 06, 2014 - 02:13

German industrial orders tumbled in August by their largest amount since the height of the global financial crisis in 2009. France is also under pressure as the European Commission could reject their 2015 budget draft and ask for a new one. Melanie Ralph looks at whether Europes core is finally rotting.

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There maybe be cheer and celebration at this year's Oktoberfest but the economic mood in Germany is far from jubilant. Industrial orders plunged 5.7 percent in August. Europe's locomotive is edging nearer and nearer to a technical recession. The IMF is even losing confidence. Media reports say it'll cut German economic growth estimates for 2014 and 15 by around one and a half percent. Mike Ingram of BCG says geopolitical tensions are still weighing on business confidence. (SOUNDBITE) (English) MIKE INGRAM, BGC, SAYING: Ukraine, Russia certainly being particularly important to the German economy, but I'd also say what's going on in China at the moment is also a major concern, they're also a major destination for germany's capital goods markets. The outlook for the French economy also remains bleak. Prime Minister Manuel Valls has been trying to bolster business during a visit to Britain. EU officials are losing patience with France and may demand major changes to their budget in order to meet deficit reduction targets. If they do - it will be the first time the European Commission has taken such action. Baader Bank's Robert Halver says France can't expect the European Cental Bank to provide all the solutions. (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING : "Anyone can criticise the ECB but what's the alternative? If you have politicians in the euro zone who for the most part have no interest in carrying out reforms because they are saying that they will no longer be elected, the ECB is forced to take things into its own hands. (ECB President) Mr. Draghi is forced to take these measures." Europe's core may be suffering, but the once worrisome periphery isn't doing too bad. Greece is expecting a budget surplus and is planning to issue several new bonds. Greece's deputy finance minister, Christos Staikouras: (SOUNDBITE) (Greek) GREECE'S DEPUTY FINANCE MINISTER, CHRISTOS STAIKOURAS, SAYING: "GDP is projected to grow by 2.9 percent. This will come about primarily from the increase in private consumption, and the positive impact of investments and exports." But without a healthy core, all of Europe will suffer in the long term. Just as Germany's economic success helped lift the region, it's economic pain could easily do just the opposite. .

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More jeers than cheers in Europe's core

Monday, October 06, 2014 - 02:13