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Falling oil finally hits home in Europe

Wednesday, January 28, 2015 - 01:47

German consumer spending surged in January, as falling oil prices finally filter through to wallets. As Katie Gregory reports, it could signal the beginning of a more positive outlook in shoppers across the euro zone.

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They're not known for splashing out but German shoppers are hitting the stores - and at a record rate... Despite the euro zone's largest economy suffering a few setbacks recently - consumer sentiment has surged to it's highest level in 13 years. It's largely thanks to falling world oil prices - leaving more money in people's pockets. Nick Beecroft is from Saxo Bank. (SOUNDBITE) (English) SAXO BANK, SENIOR MARKET ANALYST, NICK BEECROFT, SAYING: "Yes Germany growth will be one and a half percent this year. But I think total euro zone growth will be sub one percent, and one hopes its above zero. So it's a help as is the fall in oil price generally for the euro zone and may be the one thing combined with QE that keeps the euro zone out of recession this year." The reduced costs of fuel and heating... paired with a weaker euro and lower inflation rate - means overall - Germans are more optimistic. But the tumbling price of oil - hasn't spurred on French consumers just yet... The euro zone's second largest economy, saw consumer confidence remain unchanged in January. But considering the shock of the Paris terror attacks - this is a favourable result. The unsettling period on the streets of France put a lot of shoppers off - just as winter sales got underway. But with unemployment at a record high - France has bigger issues to focus on. (SOUNDBITE) (English) SAXO BANK, MARKET ANALYST, NICK BEECROFT, SAYING; "They have a serious need for, if you like, reform of the employment environment. The sort of reform that is being discussed throughout the whole of Europe now." There's been much talk of how low oil prices will eventually be a good thing for the global economy. The shopping boost in Germany - could be the evidence everyone's been waiting for.