Sunday 21 January 2018

Ronan L Tynan: Ignoring deflation will hasten EU slide into the abyss

Unless the ECB acts swiftly and decisively on deflationary trends, Europe is risking a lost generation


Ronan L Tynan

EUROPE is sliding towards deflation and replicating what happened in Japan in the Nineties at the onset of it 'lost decade'. However, with virtual mass youth unemployment, especially in the southern eurozone periphery, the European Union risks losing an entire generation to unemployment with appalling social and economic consequences.

We are already five years into the economic crisis, and with the PPI or Producer Price Index for October for the eurozone resulting in an annual fall of 1.4 per cent not producing cries of alarm and demands for urgent action, it is clear complacency has set in -- a form of complacency that was central in leading Japan into its infamous "lost decade".

But what is deflation and why should we be so worried?

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