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SMF Blogs > SMF European Analysis > March 2009

Europe rejects extra stimulus package

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SMF reports European inisters said on Monday they had no plans to add to recent fiscal stimulus packages despite calls from the US for radical expansions in government action to boost ailing economies.

Meeting in Brussels, finance ministers from the countries in the eurozone said they wanted first to see the effect of stimulus packages that had been passed.

Peer Steinbruck, the German finance minister, said: "We are not debating any additional measures."

He said that Germany had recently passed a second stimulus package worth EUR 50 bln ($63 bln, GBP 46 bln) and was also counting on the automatic fiscal stabilisers that increase government spending in a downturn.

Jean-Claude Juncker, chair of the "eurogroup" of ministers, said: "The 16 finance ministers agreed that recent American appeals insisting Europeans make an added budgetary effort were not to our liking."

Prepare yourself for the "New Economy"

Posted: 3/10/2009 7:24:47 AM by StockMarketFunding | with 0 comments

Fitch places Ireland on Rating Watch Negative

Fitch Ratings placed the Republic of Ireland's Long-term foreign currency Issuer Default Rating (IDR) at 'AAA' on Rating Watch Negative.

The rating action reflects sharp declines in tax receipts in January and February, negatively affecting government revenues.

This will intensify the policy challenges facing the government as it seeks to tighten fiscal policy further than anticipated in the midst of a steep recession and raises the risk of fiscal slippage. In the first two months of this year revenues were again below the already low expectations built into the government's January forecasts.

In response to these forecasts Government took action designed to produce savings this year of EUR2 bln and thereby reduce the government's deficit to 9.5% of GDP. The latest information suggests, in the absence of any further Government action, the 2009 deficit could be increased by EUR4 bln, equivalent to over 2% of GDP, implying a revised deficit of 11.5-12%.

The Prime Minister has said that new tougher measures on both taxation and public expenditure to rectify the further slippage in the fiscal position will be announced and a supplementary Budget is scheduled for the first week of April.

Fitch will re-assess the medium term prospects for Ireland's public finances in light of the deterioration in revenue prospects, forthcoming policy announcements and worsening economic conditions, which could raise the potential call on government funds to support the Irish banks.

Prepare yourself for the "New Economy"

Posted: 3/6/2009 11:31:40 AM by StockMarketFunding | with 0 comments

SMF reports ECB opposes easing euro accession

SMF reports the European Central Bank opposes changing the criteria for euro adoption to put Eastern European countries on a faster track to join the common currency.

Hungary and Poland in particular have been pressing for quick entry into the common-currency bloc, viewing it as a haven in the economic downturn.

Hungary has floated the idea of shortening the time candidates must link their currencies to the euro before they can adopt it. Poland, meanwhile, wants to quickly link its currency to the euro, in order to start the clock on the waiting period of at least two years.

The ECB is concerned that a currency linked prematurely to the euro could suffer a speculative attack by traders. That, in turn, could destabilize the currencies of other countries already linked to the euro.

Prepare yourself for the "New Economy"

Posted: 3/4/2009 8:13:34 AM by StockMarketFunding | with 0 comments

SMF Pro Traders FTSE, CAC, DAX all higher

Major indices in Europe are higher this morning, with Germany's DAX higher by 2.6%, France's CAC up 2.1% and London's FTSE higher by 1.8%.

Reuters reports that equities rebounded early on Wednesday to snap a three-day losing streak as miners and oils gained on firmer commodity prices and banks advanced after recent declines.

At 9:05 GMT, the FTSEurofirst 300 index of top European shares was up 1.6% at 680.42 points. On Tuesday, the benchmark fell 1.9% to the lowest close since the index's inception in July 1997.

The broader STOXX 600 index rose 1.6%, with energy shares topping the gainers list, followed by banks. Oils tracked crude oil prices, which rose more than $1 to near $43 a barrel. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total and StatoilHydro added between 2.3%-3.9%.

Prepare yourself for the "New Economy"

Posted: 3/4/2009 7:17:26 AM by StockMarketFunding | with 0 comments

EU summit pledges aid for eastern states

SMF reports European Union governments vowed to conquer the financial crisis and recession gripping their economies by extending help to beleaguered eastern European states on a country-by-country basis and respecting the rules of the single European market.

The fragility of the financial systems in several eastern European countries dominated an emergency summit in Brussels, where leaders of the 27-nation bloc committed themselves to "getting the real economy back on track by making the maximum possible use of the single market, which is the engine for recovery".

While recognizing the need to stop financial contagion spreading from east to west, the leaders rejected an appeal from Hungary for a €180 bln aid program to recapitalize the banking systems of central and eastern Europe and reschedule foreign currency debt.

"More, of course, will be done, but on a case by case basis, not on a category basis. In the new member-states there are different situations," Jose? Manuel Barroso, European Commission president, told reporters after the summit.

Prepare yourself for the "New Economy"

Posted: 3/2/2009 8:28:23 AM by StockMarketFunding | with 0 comments

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