Ambrose Evans-Pritchard writes about the ongoing economic woes in Europe.
Eurozone dodges triple-dip recession but submerges in 'lost decade'
Excerpt:
Europe is caught in limbo. The data is not weak enough to force a radical change in EMU policy, whether that might be a ‘New Deal’ blitz of investment or full-fledged quantitative easing by the European Central Bank.
The risk is that the currency bloc will drift into another year in near deflationary conditions, without any catalyst for real recovery. The US Treasury Secretary, Jacob Lew, warned this week that Europe faces a “lost decade” unless surplus countries such as Germany do more to stimulate demand.
[…]
Italy is now the country in deepest trouble, stuck in a fixed exchange rate system with a currency overvalued by at least 25pc. Output has fallen by almost 10pc since the peak, reverting to 1999 levels. Industrial output is down 24pc. Official youth unemployment is 42.9pc, but Italy also has the highest level of unreported jobless in the eurozone, according to the European Commission.
This is a deeper slump than during the Great Depression, and is almost certainly the worst episode in peacetime since the creation of the Italian state in 1859. An “internal devaluation” to claw back competitiveness is impossible in near deflationary conditions, since this would aggravate debt dynamics.
Full article: Eurozone dodges triple-dip recession but submerges in 'lost decade' – Telegraph.
Picture of Old Italy by werner22brigitte at Pixabay.
