Eurozone economic sentiment might have recovered modestly in May, but the outlook for growth still appears exceptionally grim. There is nothing to celebrate yet in these figures. The veil of uncertainty over recent debt crisis fears might have lifted somewhat, but Eurozone economic confidence is still stuck in a deep rut. It’s going to take a lot more than present stimulus initiatives to mend the Eurozone’s ailing economy. Government austerity, deepening recession and high unemployment are all taking their toll on confidence. Clearly, there is a clarion call for the Eurozone authorities to change tack and do a lot more to revitalise recovery prospects.
At least the ECB have responded to some degree by cutting rates to historic lows while some governments are starting to turn their backs on tougher austerity. But the ECB’s work is not over yet and there is still much more to be done on the monetary easing front. Also Eurozone fiscal policies need to be reversed from austerity to out-and-out pro-growth economic regeneration. Without change, the Eurozone will be condemned to years to on-going recession and vibrant recovery could be denied for at least a further decade. Japan has already been there and it is time that Europe woke up to the risks of a very avoidable mistake. Policy needs to change and it needs to change quickly.
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