Your Cash Injected?
The European Central Bank’s (ECB) liquidity operation may have rescued the financial system but it cannot rescue the economy. Following a quiet Q1 the Eurozone is back in choppy waters and Spain is at the centre of the storm. This time concerns are as much about economic growth as they are about debt. Spain’s domestic demand is weak and austerity will make it worse. The economy will need to rely more on exports, and it’s not alone in this. Here the news is good and bad. China’s economy is relying more on domestic demand, which should be more supportive of global growth, especially for those countries that actually export to China (the UK could do better in this regard). In contrast, Germany’s continued reliance on exports is failing to offer succour to its weaker neighbours. Add lower expected global trade growth to the mix, and Eurozone tensions are likely to remain high for some time. (AFter RBS)