- Rajoy in the starting blocks
- Agreement on the Greek budgetary pack
- The Troika renews support to Ireland
Although the risks of a deeper eurozone crisis have diminished since early September, when the ECB announced its new OMT programme, the recovery has been slow in the making. This week the October PMI surveys indicate that the economy continued to contract at the start of the fourth quarter. The composite output index declined by only a few points, but is now at the lowest level since June 2009, and is consistent with a contraction in GDP of about 0.4% q/q. So the eurozone is still looking feeble, which contrasts all the more with the clean bill of health issued to its cross channel trading partner following the release of its preliminary Q3 GDP estimate. After three quarters of contraction, the UK has finally swung back into growth of 1% q/q. Some already see the UK racing to the forefront of countries participating in the global recovery. Yet we still advise caution: the strength of the rebound is largely due to the organization of the Olympic Games last summer and to an extra business day after the long weekend celebration of the Queen’s Jubilee. Moreover, September’s economic data were estimated by the ONS, and the definitive figures are bound to be revised downwards, particularly for the oil sector, where production was hit by the shutdown of North Sea oil platforms. Without these exceptional factors, UK growth would have been much lower than 0.5% q/q.