2023-06-19 23:07:11

The position of financial institutions in the euro area is strong.
Emmanuel Macron, President of France

It is not entirely clear the general direction of the European economy in general, and the economy of the euro area, which includes 22 countries in particular. This is due to the state of uncertainty that this region is going through, with the continuation of the monetary tightening policy pursued by the European Central Bank, like other central banks in developed countries, with the exception of Japan, which maintained interest rates at their minimum levels, even in light of inflationary pressures. At the beginning of this year, the “euro economy” slipped into a simple recession, so to speak, and the reason was mainly due to a new rise that occurred during that period in energy and food prices in general. But the dangers of this recession deepening are still present, despite the fleeting growth of this economy in the first quarter of less than 0.1 per cent.
Perhaps the eurozone economy will achieve quarterly growth that may reach 0.2 percent later, but this growth remains in a shaky position, due to the successive increase in interest rates, which recently reached their highest level in 22 years. The pressures on the eurozone will remain present until the full picture becomes clear, especially the final form of the war in Ukraine, which has doubled the burdens on all Western economies, especially the “European” ones. It falls directly within the circle of this most dangerous war in the world since World War II. The costs of military confrontations are rising, and their negative effects on supplies, especially energy, continue, even following Europe managed to reduce its dependence heavily on energy coming from the Russian mainland. French President Emmanuel Macron is optimistic regarding overcoming the current crisis, which he, like other Western leaders, considers global rather than local.
However, this does not provide the solid ground for raising growth rates in the euro area, not even following the middle of the current decade. The consequences of inflation will remain for a long time, and interest will continue to rise, or it may remain within its high limits for a period that will certainly not be short. In the first three months of this year, the gross domestic product of the countries comprising the eurozone declined at an annual rate of 0.4 percent. This followed a roughly similar decline in the fourth quarter of last year. According to the European Union’s statistics agency “Eurostat”, the changes, which the agency described as “significant” in the data coming from Germany, Ireland and Finland, strongly led to a contraction of the region’s economy as a whole, leaving the region in a state of contraction for two consecutive quarters, and this confirms the official definition. to economic recession.
These critical developments come at a time when figures emerged that shocked the European Union as a whole. Thirty years following the launch of the European Common Market, the movement of capital between the countries of the European Union as a whole remained below the desired level compared to the increasing movement of people and goods across the borders of these countries. This remarkable point prompted the French legislators, who are most enthusiastic regarding the European entity in all its conditions and forms, to raise question marks regarding that. What prompted even the French president to talk regarding the need to work not only to strengthen the European economic entity, in addition to his relentless movement in order to transform this entity into a third world power, alongside the United States and China.
It is clear that the modest flow of private capital, specifically through the countries of the Union, at this critical time, will raise more questions indefinitely, regarding the obstacles causing this. However, this is not urgent now, while the scourge of inflation is being treated, and the pressures coming from more than one source on the euro economy in general. According to the European Central Bank, the peak of core inflation will not be sufficient to declare victory, because the situation needs convincing evidence of a return of consumer prices to the official target of 2 per cent. But logically, it is difficult to achieve this goal even in the next two years, because the effects of the massive inflationary wave are already large and pressing. In fact, the European Central Bank itself set an inflation target of 3.2 percent next year, while it is expected to reduce it by the end of this year to 5.8 percent.
In any case, the coming period will be difficult in the eurozone, as is the case in the British arena, which is also facing pressures that caused a social real estate crisis similar to the one that erupted in the early nineties of the last century, when tens of thousands of families were forced to hand over their homes to creditors. There will be no close or remarkable European growth in the second half of the current year, so talking regarding acceptable growth in the coming period will not be realistic, especially with the European Central Bank’s adherence to the policy of raising interest rates to limit inflation that came amid dangerous and influential regional and global interactions in every aspect. aspects.

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