The preliminary Eurozone GDP numbers for the fourth quarter of 2012, published in the European morning, paint a rather gloomy picture of economic activity in the area: growth declined sharply by 0.6%, which makes it a third straight quarterly fall. GDP in the three largest Eurozone economies shrank more than expected.
Germany saw a 0.6% decline, France contracted by 0.3% and Italy by 0.9%. Portuguese GDP plunged by 1.8%, which makes the country the worst performer in the Eurozone. Only Estonia and Slovakia registered growth in the area, but results for Ireland, Greece, Luxembourg, Malta and Slovenia are still pending.
ING analyst Peter Vanden Houte comments: “While we expect a stabilisation in the first quarter and a weak recovery from the second quarter onwards, one has to acknowledge that a lot of things still can go wrong. The economic and political outlook in Spain and Italy remains uncertain, while the difficult bail-out of Cyprus could stoke contagion fears. Therefore it is certainly not a time for the ECB to lean back and relax.”
EU unveils financial transaction tax proposal for 11 Member States
The European Commission announced a new proposition of the so-called Robin Hood tax on Thursday, which is to be imposed on financial transactions in eleven of the 27 EU Member States (Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia) and should raise 30-35 billion euros annually.
The modified plan assumes an introduction of a system which would prevent financial institutions from moving their operations in order to avoid the tax. On the other hand, the initial proposition of levying taxes on all the operations in which at least one of the institutions is from one of the eleven participating countries, will be maintained.
The new proposition established rates of 0.1% for stock and bond trades and 0.01% for derivatives trades. Nevertheless, each participating country would have the possibility of raising the tax. Day-to-day transactions carried out by individuals and non-financial companies, operations involving raising capital and those of central banks and EU financial institutions would be excluded from the scope of the FTT.
The US heavily criticized the proposition claiming that the FTT transgresses international treaties and that it “breaks the bonds that bind our global economy.” Also the UK and Luxembourg are against the tax.