Wednesday 13 December 2017

State of the nations as hardest-hit eurozone members turn corner

European Central Bank in Frankfurt.
Colm Kelpie

Colm Kelpie

THERE's talk that the crisis in the eurozone is over. It's no longer front page news. Two countries have left bailouts – Ireland and Spain – and Portugal will follow suit in May.

There are signs that the economy of debt-riddled Greece may be beginning to recover, with projections that it will emerge from recession this year.

Borrowing costs of the troubled countries have fallen as the bloc may still be enjoying the 'Draghi effect' - the impact of reassurance from the head of the European Central Bank that it would do whatever it takes to safeguard the single currency.

Economic sentiment across the eurozone rose this month, helped by a boost in morale among consumers in France and Germany.

Consumer confidence improved sharply to swing above its long term-average for the first time since July 2011, thanks to improving job expectations and a brighter outlook.

Significant problems remain, however, including the threat posed by the predicted long period of inflation the 18-member bloc is facing.

Recovery is expected to pick up speed later this year on the continent, and the Irish economy is projected to grow at about 2pc. But how are the countries worst hit by the crisis in Europe faring?


Portugal's economy started to recover from its worst downturn since the 1970s last year.

Lisbon sold €3.25bn worth of five-year bonds earlier this month amid significant interest from international investors, which boosted confidence in the country as it prepares to exit its €78bn international bailout in May.

Like Ireland did in the latter months of last year, Portugal is weighing up whether to go it alone or tap into a precautionary credit line to ease the transition from bailout to funding itself on the markets. Recent reports suggest the government will follow Ireland's lead.


The Spanish economy grew for a second straight quarter in the final three months of last year. Signs of a recovery in domestic demand and in exports helped give the country's economy a lift as 2013 drew to a close. Unemployment has been a significant problem, with the numbers out of work soaring to record highs. The jobless rate remains stuck at 26pc, although there was a slight drop in the final quarter.

"These are positive elements which, to some extent, show we've left the recession behind, but the path ahead is full of obstacles", said Economy Minister Luis de Guindos yesterday.



The worst-hit European country, the yields on Greece's 10 year bonds soared as high as 37pc in early 2012. They're currently at over 8pc. Its economy has declined almost 25pc in recent years, but it is now running a primary budget surplus of at least €1bn excluding interest payments. But the population remain deeply angry about the hardships they have had to endure. The €240bn bailout programme has been blamed for record levels of unemployment.


There's been plenty of focus in recent weeks on Francois Hollande's private life. But we've also had his more turgid plan for economic recovery, announcing public spending cuts and tax reliefs for businesses. Pressure has been heaped on the President to deal with France's economic malaise. Growth remains anaemic, predicted at just 0.2pc last year.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business