Sound bites: Eurozone economic confidence still needs more of a lift

Eurozone economic confidence is back in business again, rising to 102.7 in May from 102.0 in April. But the Eurozone recovery still needs more of a lift. Consumer and business confidence is rising but is still generally diffident about the outlook ahead. Uncertainty about global economic prospects, worries about the crisis in the Ukraine and the long wait for additional ECB easing have been clouding the recent picture. But this should all change next week once the ECB shifts into an easier credit gear again. An interest rate cut into negative territory and a decisive step towards quantitative easing should do the trick. If the ECB can deliver the goods on significantly easier monetary policy, the obstruction to faster Eurozone recovery could clear quite quickly. Growth expectations for the next year could double from 1% to 2%. It would mean the ECB’s acceptance of a radically weaker euro and the risk of higher inflation but this is what the Eurozone recovery needs right now. The EU summit this week is looking for a change in the political landscape and demanding faster growth and more job creation to blunt the election in-roads made by euro sceptic parties. It is time for the ECB to grasp the nettle. The price will be a much weaker euro, but a stronger Eurozone economy will be the reward.