Note: The thoughts and topics in this diary are discussed from a public affairs and not a financial analysis or even economic analysis point of view.
June 23:* UK: According to the Centre for Economics and Business Research (CEBR) approx. 334,000 jobs will be lost in the Business Services sector by 2011 because of the economic crisis.
* Germany: According to the Ifo index, in June, companies in Germany were more "confident" than in the last 7 months.* Eurozone: According to the President of the European Central Bank, governments that have borrowed heavily to boost their economies should not accumulate any more debt.
* UK: car production dropped sharply in May (on year-on-year basis)
UK, May: Retail sales were 0.6% down compared with April and 1.6% lower May 2008.
Yet sales in the March to May trimester were up 0.3% compared to December 2008 - February 2009.
June 18 - 19: EU Summit results* Commission President: Jose Manuel Barroso got unanimous backing by the heads of state and government of the 27 for a new five-year term as European Commission president.
* EU Treaty: The new referendum in the Republic of Ireland seems that will take place in early October. The Irish Irish Prime Minister is optimistic that the deal achieved in the Summit on an EU protocol as well as a legally binding EU decision that clarify that the new EU Treaty (the Lisbon Treaty) will not affect Irish sovereignty re military neutrality, taxation and anti-abortion policy will manage to reassure the Irish voters and thus yield a "Yes" majority this time.s
June 12:Eurozone: Industrial production in April was down a record 21.6% compared to April 2008.
The EU institutions upcoming work:June 18-19: European Council - Summit Leaders where the heads of EU states and governments will decide who to nominate for the position of European Commission President for the next 5 year term which will probably start in late 2009.
The incumbent President and former Portuguese Prime Minister José Manuel Barroso has secured the initial backing of many EU leaders, including at least 3 social-democratic ones.
Yet he will need the approval of a majority of the MEPs for his nomination. The EPP has 265 members which is way short of the 50% + 1 number. Notably ALDE (and the Greens) have publicly opposed another Barroso term! (The EP will vote on the nomineed for Commision President probably on July 15 and on the whole Commision "cabinet" (or "College") later, this autumn).
July 14-16 (Strasbourg):
The EP's first Plenary meeting.
The vote for Mr Barroso's candidacy is provisionally scheduled for 15 July.
Parliament's 20 Committees will meet for the fist time in the 2009-2014 term in the weeks after 20 July.
Record low voter turnout in the EU's European Parliament elections.
The economic situation seems to have affected imports more than exports, thus Hungary posted a trade surplus of Euros 619 million in Q1/2009 compared with a Euro 282 million surplus in Q1/2008! (source: KSH)
Eurostat estimates that 20.8 million people in the EU were unemployed in April, 556,000 (8.6%) more than in March (8.4%).Eurozone16:
Eurostat estimates that 14.58 million people in the Eurozone were unemployed in April, 396,000 (9.2%, the biggest rate since 1999) more than in March (8.9%).
Spain tops the rates with 18.1% (major problem is the real estate - construction sector's crisis), whereas Netherlands has only 3%, followed by Austria (4.2%).
* Eurozone16 inflation zero (!) in May! 0.6% in April.
England and Wales: Improvement in business confidence index
The Institute of Chartered Accountants' index of business confidence rose to -28.2 at the end of March, from -45.3 at the end of the December.
Germany: Improvement in the business climate in May ..
... based on the Ifo Business Survey May 2009, driven by the 'climate' in wholesaling and in retailing, whereas in manufacturing the business climate remains unchanged and the business climate in construction has worsened once again.
Of course, business confidence, by its very nature (a sentiment, ie emotion) is based on surveys of samples and creation of indexes, not statistical data.
* The UK economy in Q1/2009
The GDP of the UK economy in Q1/2009 shrank 4.1% on a year-on-year basis and 1.9% when compared to Q4/2008. The decline in manufacturing was less steep than previously thought, ie down 5.5% is the revised number, rather than 6.2% as initially estimated, but still the biggest decline since 1955! Government spending was the only sector of the economy in growth territory (all others had (-) negative growth, ie shrank).
* Consumer subsidies to boost the purchase of new cars: After Germany and Spain, China is planning expand a program that subsidises not only the purchases of new cars and but home appliances as well!
* UK repossessions up 50% in Q1/2009.
* Eurozone16 trade surplus in March!
Against expectations for a deficit, the Eurozone16 registered a trade surplus of 400m Euros in March, following a 1bn Euro deficit in February (revised datum). The last surplus had been a mere 20m Euros one in June 2008.
Yet, as a whole, the European Union (27 members) registered a 9.5bn Euro trade deficit in March (10.8bn Euros in February)
* Eurozone and EU Q1/2009 data:
The Eurozone16 (part of EU27) declined by 2.5% in Q1/2009 compared to the previous quarter, more than the 2% expected. On a year-on-year basis the decline was 4.6%. The European Commission predicts a contraction of 4% for 2009 in the Eurozone16.
In April consumer price inflation in the Eurozone16 remained at +0.6%.
EU27: GDP declined 2.5% as well, the same as in Eurozone16.
* Germany: Bank bail-outs
This week, the German cabinet agreed to propose to the parliament a scheme to enable the country's banks to remove remaining "toxic" assets from their balance sheets. How? The banks will be able to swap their toxic debt for government-backed bonds worth 90% of the value of the toxic assets. In return they will pay an annual fee. This toxic debt will be "stored" for up to 20 years. If approved by the parliament, the scheme will be financed by Germany's existing 500bn euros bank rescue fund.
NB: I recall, some week ago, that a proposal had been agreed by the German government cabinet (a historic coalition between the country's two main parties, the Christian Democrats and the Social Democrats) that would allow for the temporary "nationalisation" of any German banks, if needed. I have not kept up with the issue (eg was it finally agreed and was it passed by the 2 chambers of the German parliament?), and I am not sure how it relates to the above scheme.
The GDP stats for the first quarter of 2009 (Q1/2009) are in for Germany, France as well as Spain.
a) France. The fall/shrinking of the GDP was 1.2% (which is in line with expectations) compared to the previous quarter. Since in Q4/2008 the stat was -1.5%, this has given rise to views that the recession in France "may" be easing. No comment! By the way, the French Economy Ministry expects the French economy to contract by 3% in 2009.
b) Germany: Driven by lagging exports and investment, the GDP drop in Q1/2009 was a record 3.8% (!!), ie the worst GDP performance since re-unification (compared to the previous quarter), yielding a year-on-year drop of 6.7%, against a 6% prediction for the whole year 2009 made by the German government! The Q4/2008 drop, 2.2%, was the previous record low until the stats for Q1/2009 came in!
Is Germany (along with other traditional exports - trade surplus world "champions" economies) paying a price for their over-reliance on exports?
c) Spain: In Q1/2009. GDP fell 1.8% compared to Q4/2008 and shrank 2.9% on a year-on-year basis, based on preliminary data, making this the worst GDP performance since 1959! The Spanish government has predicted a GDP drop of 1.6% for 2009
Spain, which joined the EEC/EU in 1986, enjoyed 14 years of consecutive growth until it entered into recession Q4/2008. It seems that many experts think that Spain has major "economic imbalances" and that this will delay its rebounding. It also seems that the construction industry's major perils are a core driver of the Spanish economic recession.
Europe: In how many of the member countries of the European Union the Euro-MP election period will focus on EU-wide political and policy issues rather than national political - policy ones and (national) party politicking?
UK manufacturing output continued to fall, but the fall was not as severe as had been expected (and that is supposed to create optimism??). In Q1/09, UK unemployment went up by 244,000 to 2.22 million to 7.1% of the workforce.
Several central banks decided to cut their interest rates today.
The European Central Bank has cut interest rates in the Eurozone to a record low of 1%, from 1.25%. It is the seventh time the ECB has lowered its key rate since October 2008, when it stood at 4.25%.
Iceland's central cut rates from 15.5% to 13% in its third cut this year. Denmark cut rates from 2% to 1.65% and the Czech central bank cut rates from 1.75% to 1.5%.