The attention remains on the swelling budget deficit in Europe, which is haunting the outlook for nations while today from the UK, expectations are showing that the budget deficit will widen. From the euro zone, the trade surplus will narrow as projections reveal.
Beginning off with the UK, public finances (PSNCR) for February is projected to show that the surplus of 11.8 billion pounds will become a deficit of 11.0 billion pounds as the nation continues to borrow, which on the long term is not a good factor as it worsens their fiscal position.
Also to be released from the nation is public sector net borrowing for the same month, with expectations showing that the deficit will widen to 14.0 billion pounds from the prior 4.3 billion pounds.
The higher the debt that the government is receiving only supports the fact that officials are stressing all possible measures while also giving evidence that the economic scenario remains impaired as a result of the worst economic recession since World War II.
From the euro zone, today is scheduled to release its trade balance in which expectations show that for the month of January, trade surplus will become a deficit of 4.0 billion euros from the trade surplus of 4.4 billion euros. While the same reading, but seasonally adjusted, is also projected to show that surplus to narrow to 5.5 billion euros from the prior 7.0 billion euros.
As we are well aware that exports are declining in the 16-nation economies, it is crystal clear to us that the trade surplus is narrowing as a result of the weak exports. The trade surplus is shrinking from the dampened domestic and international demand which is not a good sign for the region.
Since the euro-zone depends on exports heavily for growth, a full economic recovery to take place soon is difficult especially as the euro zone grew only by 0.1% in the fourth quarter while employment rallied to 9.9%, a weak labor market therefore weighs further on domestic demand since consumers do not have sufficient cash to spend in the region.
Alongside lower exports from the euro zone, the budget deficit around the region negatively impact the outlook of the euro zone, while we saw earlier this week the EU finance ministers to provide emergency loans to Greece, which suffers from a 12.7% budget deficit of GDP.
Negative sentiment presumes in the European continent while there are major concerns that the budget deficit might just be the upcoming bubble to occur after this worst financial crisis since post world war era.
Standard & Poor's lately stated that they are no longer watching the credit rating of Greece which meant they are gaining confidence that the government is taking necessary measures into narrowing the budget deficit, and this somewhat helped restore some light in markets.
