The major advantage of linking the European economies together would be that in the case of a financial disaster in one state, the damage would be mitigated by continued growth in other nations. In theory then, stability would be assured, there would be strength in numbers. The global economic crisis of 2008 took most nations by surprise though, and we saw the Eurozone struggling to bounce back from the severe hit that its globalised economies took, with manufacturing down and consumer confidence at a startling low. It’s now been 7 years since that crisis took hold and we’ve begun to see many of the Eurozone economies come back fighting. Now, we’ve got the Q1 results for growth across the ‘Zone, and things are, broadly speaking, looking very positive.
Headlining the news is that the single currency bloc grew by 0.4% between January and March 2015, which outpaced both the UK and the USA and was up by 0.1% from the previous quarter, a surprising sight given that the Christmas period falls in that last quarter. It was also the fastest period of growth in almost two years, which, whilst still slow in general terms shows a Europe that’s finding its feet and getting back to strength following a long period of trouble.
Naturally though, with Greece on the brink of defaulting on its debts and potentially refusing to pay them back altogether, things could turn sour quickly. Talks are ongoing between the IMF and Greece, but many economists are fearing the worst. President Barack Obama, however, isn’t too worried about the effects of the Greeks choosing to forge their own path free from Europe, stating “In layman’s terms, for the American people, this is not something we believe will have a major shock to the system, but obviously it’s very painful for the Greek people, and it can have a significant effect on growth rates in Europe”.
Nevertheless, this past quarter has been strong for Europe, with Cyrprus seeing a 1.6% increase compared to Q4 2014, followed by Spain on 0.9%, Slovakia at 0.8% and France at 0.6%. Meanwhile, Latvia, the Netherlands and Portugal were all on 0.4% growth and Belgium, Germany, Italy and the UK were on 0.3% growth.
Understandably, Greece saw a shrinkage of 0.2% of their economy. Standard & Poor’s are warning that should Greece exit the EU, it would suffer a further 20% reduction, though Europe as a whole would suffer few ripple effects due to Greece’s closed economy and few trade links. That’s good news for manufacturers across Europe as well as the world, who wouldn’t see a drastic fall off in orders should the Greek choose to leave. Indeed, the broad growth across Europe would likely falter briefly but return quickly.
Back in the UK, seeing the Euro economy growing faster than the UK economy is something of a novelty, having consistently outpaced the larger, more cumbersome and dependant EU economy. Q1 results for the UK showed that growth fell from 0.8% in Q4 to 0.4% in Q1 2015, the sharpest drop off in two years, but analysts are predicting that it’s nothing more than a minor bump in the road towards a strong recovery something that was news to the ears of the chancellor George Osbourne.
Nevertheless, seeing growth across the majority of the European Union is nothing but good news for businesses such as Custom Fittings Ltd across the world. As the world’s largest combined economy, the health of our union is crucial to ensuring that countries across the globe can succeed.