Friday 24 November 2017

ECB helps lift euro zone mood in February, outside of Germany

Mario Draghi, president of the European Central Bank (ECB). Photographer: Martin Leissl/Bloomberg
Mario Draghi, president of the European Central Bank (ECB). Photographer: Martin Leissl/Bloomberg

Confidence in the euro zone's economy strengthened for the second straight month in February, but the improving morale in Italy, France and Spain was not shared in Germany, where there was less support for the ECB's money printing plan.

The European Commission's economic sentiment indicator rose by 0.7 points to 102.1, the EU executive said on Thursday, helped by households feeling more confident about shopping, which had a knock-on effect on retail and services.

That reading was better than the 101.9-point forecast by economists in a Reuters poll, although the Commission's business climate indicator disappointed, falling slightly by 0.05 points to 0.07, as managers of expectations of orders worsened.

Overall, the data suggests the ECB's decision to launch a 1.1 trillion euro program of government-bond buying - announced on Jan. 22 - helped the mood in the euro zone. Still, that was not the case in Germany and neighboring the Netherlands, where economic sentiment declined 0.5 points in both countries.

The bloc's 2010-2014 debt crisis destroyed business confidence, while during the aftermath, falling consumer prices have set in across the currency area.

That prompted the European Central Bank to announce a money-printing plan to revive inflation. From next month until September 2016, the ECB will purchase sovereign debt to release €60bn a month into the economy.

Germany's Bundesbank opposed the ECB's bond-buying plan and the German government voiced reservations that it removed incentives for euro zone member states to carry out the kind of structural reforms prescribed by Chancellor Angela Merkel.

The economic sentiment data for February puts it back at a level last seen in July, also suggesting that the impact of the crisis in Ukraine and the conflict with Russia that flared early last year is also weighing less on investors' minds.

Online Editors

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business