EUROPE DOWN


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EU Nations Agree on Bailout Deal
On 9 April, the finance ministers of the European Union’s 27 member countries agreed to a €500-billion rescue plan for the continent.
The plan rejected calls from Italy and Spain for collective borrowing, leaving each country to do that on its own. The Netherlands gave up its insistence that Italy and other member countries with poorly managed finances commit to structural reforms as a condition for help.
The plan is a step, not a solution, the ministers warned.
For example, France expects its economy to shrink six percent this year, even though the country is implementing its own €100-million relief plan in addition to the EU’s bailout package, according to Bruno Le Maire, French finance minister.
Italy Stares into Economic Abyss

March, the month in which Italy’s nationwide lockdown was instituted, was the worst month on record for the country’s manufacturers. They warn if their factories don’t reopen soon, their customers will be lured away by foreign competitors and may never return.
Many German factories that compete with Italy’s in areas such as machine tools are still at least partially operating.
“There should have been a decision across Europe to stop production for a certain period,” argues Massimo Carboniero, a machine tool company executive. “It’s not fair for us to be closed while others are working.”
Italy’s businesses are especially at risk in Europe’s shutdown: 95 percent have fewer than 10 workers, many are family-owned, and have few resources to survive a prolonged loss of trade.
Winemakers have seen sales to bars and restaurants vanish and exports plummet. Some have begun using their alcohol to make hand sanitizer.
Italian agriculture depends on 200,000 seasonal workers coming from eastern Europe who aren’t crossing the border this year.
Italy faces an overall 6-percent economic contraction this year, with the worst of it in the second quarter if the pandemic eases by May, forecasts Condustria, an employers’ association. If so, the country’s economy could see a modest rebound in the second half of this year, the association said.
TREND FORECAST: The French, German, and Swiss economies could shrink by as much as 10 percent this year, some economists forecast. For Italy, Greece, Spain, and Portugal, it will be much worse.
Global trade in merchandise will fall by a third from last year’s level, according to the World Trade Organization, compared to just 12 percent during the Great Recession.
As we have continually noted, Europe’s GDP rose only 0.1 percent in the last quarter 2019, despite years of negative interest rates and over €3 trillion in quantitative easing pumped into the economy.
Therefore, not only do we forecast a “Greatest Depression” Europe that will be worse than the United States, social unrest, which was already building prior to the pandemic panic, will greatly intensify… as will military crackdowns to quell them.
 

 

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