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Eurozone Investor Confidence Falls Further

James Boston
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Eurozone Investor Confidence Falls Further

Investor sentiment in the Eurozone remains subdued according to the latest figures for the month of October. The Sentix Investor Confidence scale is registering a level of –13.7 this month compared to the -9.8 experienced in September when it turned negative for the first time in over a year, market consensus was expecting a reading of -11.5 in this month’s figure.

The recovering Eurozone is facing a number of challenges that are taking their toll on sentiment figures across the board. Sanctions against Russia couldn’t have come at a worse time for many of the struggling EU nations, but the reality is that this is just one more thing to worry about in a growing list of problems for the Eurozone economy. Signs of recovery had begun to appear during the first two quarters of this year but most predictions are for the Eurozone to register zero growth during the third quarter with mixed but deteriorating forecasts for Q4 and the year as a whole.

There are many areas that could be looked to for an explanation of the Eurozone’s lack of progress in a global environment that has seen most developed economies benefit. Two in particular however should be examined further. Firstly, the strictness with which austerity has been imposed across the economic bloc has undoubtedly hampered growth. Austerity has a purpose, fiscal rectitude and reform that leads to stability in the longer term, this will stand to the Eurozone economy once growth returns but in the interim it is itself preventing this growth from taking hold in the first place. The second reason for sluggishness in the Eurozone economy is on the monetary side, the persistent lack of inflationary growth during the first half of this year was a strong clue that underlying economic activity was slack, proportionate stimulus has finally come from the European Central Bank, and better late than never, but the bloc would have benefited from greater stimulus earlier the year.

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