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Euro zone, an economy struggling against multiple headwinds

Monday, October 6th 2014 - 11:45 UTC
Full article 6 comments
UK Chancellor Osborne said the weakness in the Euro zone was “probably the greatest immediate economic risk” to the UK. UK Chancellor Osborne said the weakness in the Euro zone was “probably the greatest immediate economic risk” to the UK.

A survey measuring business activity in the Euro zone shows the economy remains “stuck in a rut”, according to the company behind the report. The Euro zone purchasing managers index (PMI) fell to 52 in September, down from an initial estimate of 52.3.

Anything above 50 indicates expansion, but at this level, Markit said, the overall picture is one of an economy struggling against multiple headwinds. However, separate figures showed retail sales rose 1.2% in August from July.

And compared with August the previous year, retail sales were 1.9% higher.

“It may be that retail sales were lifted in August by people determined to enjoy their summer holidays after a difficult year. There may also have been a boost to retail sales coming from squeezed consumers looking to make the most of the summer sales in some countries,” said Howard Archer, economist at IHS Global Insight.

Markit said that France saw solid declines in both manufacturing production and service sector activity. The contraction in Italy was centered on the service sector, as manufacturing output expanded.

Last Thursday the European Central Bank (ECB) detailed plans to buy assets to boost the economy. Markit's chief economist, Chris Williamson, said the latest PMI survey added to pressure for the ECB to expand its asset purchase plan.

Meanwhile the Chancellor George Osborne said the weakness in the Euro zone was “probably the greatest immediate economic risk” to the UK. 40% of the country's exports are destined for the Euro zone.

He urged businesses to look further afield, to places such as Asia and South America.

“Too many of our small and middle-sized businesses have felt daunted about entering into export markets. That's not the case for small and medium-sized companies for example in Germany,” he told the Institute of Director's conference in London.
 

Categories: Economy, Politics, International.

Top Comments

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  • Briton

    If you really truly think this is true,
    why are you masking us wait 3 years for the referendum,

    think how much British money that will put in EU coffers instead of British coffers..

    Oct 06th, 2014 - 06:50 pm 0
  • GeoffWard2

    When you start defining the purchase of food and clothing as a measure of 'industrial activity' you are in a state of self-delusion from which there may be no return.

    Oct 07th, 2014 - 09:43 am 0
  • Britworker

    France is being destroyed by the Euro, they are meant to be its second biggest success story after Germany but their two economies are completely incompatible with each other. The Euro was never going to work for France it is too protectionist.
    We need to get out of Europe ASAP and begin the process of forging new export markets globally as well as keeping a free trade agreement with the EU. When the Eurozone collapses, it will take the EU, the Commission and the central bank down with it. We need to have distanced ourselves as much as possible before that happens or we will get sucked in.

    Oct 07th, 2014 - 04:10 pm 0
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