The European road to Tarsus

Last February, we said “With Signor Monti , installed by Brussels, and not the Italian  people, and ( the EU,s chosen autocrat) coming a poor fourth, will austerity be given the elbow” Now  we can hear the sound of tyres squealing as the euro zone turn sharply from austerity to growth. The change of emphasis is now from reducing budget deficit to either ignoring and overshooting the agreed 3% rule or simply turning a blind eye.

One may wonder why our European politicians have suddenly seen the light. I think there is no one reason, but a number of underlying reasons which have been on the sidelines for too long. Firstly there is the record unemployment of people from 18- 25 years of age. If you effectively ignore these for too long, the risks of either democratic apathy or extremism will increase. With summer coming, no wonder that Angela Merkel will host an European job summit for young people.

Secondly, Germany only just avoided a recession in the first three months of 2103. as Europe’s largest and strongest economy showed growth of just 0.1 % . This figure was disapointing and could be down to the very poor weather Germany had in the first three months, however in neighboring France, they dipped into a recession with -0.2% . With these figures, something had to be done to start to stimulate both their economies, and those of surrounding countries.

Thirdly, I do not think it is purely coincidence that Germany has moved to a growth strategy, as in September, there is the German general election. Austerity can only last for a finite time with the electorate, they have to see that there is light at the end of the tunnel. In other words, a “feel good” factor.

Does all this mean that the good times are back? I have my serious doubts. The next key date is the 11th and 12 of June at the German Federal Court in Karlsruhe, where whey will decide if the buying of government bonds by the ECB was lawful. If the judges find against the ECB, the road ahead will be very rocky.

If you also wish to be on the road to Tarsus, and be ahead of the European equipment leasing market again, come and talk to us at Oak Leasing. We have shown further that we understand and can help you accurately plan ahead with your European leasing programmes. If you wish to see the light, just give Oak a call.

 

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23 Responses to The European road to Tarsus

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