Belfast Telegraph

Wednesday 23 July 2014

The great Euro engine room could be stalling

If you can keep your head when all about you are losing theirs then you'd be doing well in this economic climate. Certainly the one country considered a pillar of strength by its neighbours seems to have misplaced its noggin a la Worzel Gummidge after a night on the cider.

German business confidence has fallen to a level not seen since the immediate aftermath of the Lehman brother's collapse in 2008 and brought home real fears that the engine room of the Eurozone is flagging. At the same time main stock index the DAX has fallen over 20% since the start of August.

This is a worry because Germany has been charging its way out of recessionary times with a vigour that has put other economies to shame.

You don't need me to tell you it's a big exporter; just take a look at the number of German cars on the road as you drive home tonight for evidence that the old Audi tagline of "vorsprung durch technik" (advancement through technology) has reaped massive benefits for it and many other German engineering companies over the last few years.

Germany's economy has been considered so strong that its bonds are used as a benchmark from which other countries' bonds are measured because most other nations have to pay more to borrow money than Angela Merkel's treasury.

But as an exporter, Germany has had to put itself at the mercy of world markets and because its main customers are in the rest of Europe and the US, it has caught the cold that the rest of us have been floored by.

Meanwhile, consumer confidence in the UK has fallen again in July and is expected to fall further in August, according to Nationwide.

The one piece of good news - if you can call it that - we can pick from this from a Northern Ireland point of view is that this forward-looking pessimism is heavy with the premise that the riots in England will have dented confidence further this month.

That said, it's hardly likely our economy will have stormed ahead in the squeaky clean absence, just this once, of a bit of rioting.

You just have to take a look at news today that Eason, that stalwart newsagent and purveyor of pencil cases to a plethora of schoolchildren during these back to school days, is to shut stores across the Republic and Northern Ireland.

I promised to try and be positive in this column the other day but it's very difficult with news like this coming at us. Of course we do have good old Ben to look forward to.

US Federal Reserve Chairman Ben Bernanke is to make a speech on Friday and in it he's expected to set forth his plans on how the US economy is to be rescued.

Even the anticipation of his speech has helped boost stock markets around the world and we can only hope he comes good, for the sake of all our economies.

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