Positive signs for the European Union

New encouraging signs regarding Eurozone announced yesterday, although the picture varies from country to country. The supreme economic indicator of the Conference Board for the eurozone increased further in July by 1% reaching 112.5 points, after an increase of 0.4% in June.

The increase shows that the economic recovery remains strong during this early third quarter, although analysts warn that the perspectives remain uncertain. “Economic activity in the region will probably decrease in the next few weeks”, estimates Mr. Jean Claude Maninis an economist of the Conference. “The instability of confidence indices, in combination with the different economic performance between the North and South countries in the eurozone, reveals that the recovery remains fragile”, he said.

Germany
In Germany, consumer sentiment index is expected to be better than October 2009 as unemployment dropped significantly. The GfK institute’s index, which is based on consumer expectations for the next month, increased slightly to 4.1 points. “The decline of unemployment and the return of many workers in full time status boosted the confidence of consumers”, said Mr. Rolf Berkeley, analyst of GfK. In Italy, however, the consumer sentiment index of the ISAE institute fall in August to its lowest level of the past 15 months.

Spain
At the same time in Spain, the government revised slightly upwards the estimations of the economy for the second quarter. According to revised data, Spanish GDP fell by 0.1% compared to the initial estimations of 0.2% contraction. Madrid seeks ways to reassure markets that will not stray away from the path of fiscal discipline. The Spanish Minister of Public Works, José Blanco, said that in 2011 spending on infrastructure will be reduced by 700 million Euros over original estimates of 500 million. The newspaper «Bild» claims also to an article that the German government might also reduce the spending on infrastructure by 5 billion Euros for the next year. However, many fear that insisting in rigor measures will set back the economic recovery.

Foreign Minister of Finland Alexander Stubb – who served as adviser to former President of European Commission Romano Prodi – said in an interview to Bloomberg that the adoption of stricter budgetary rules of the European economy will produce better results than the U.S.