Friday marked the 70th anniversary of the end of World War II in Europe, following the formal military surrender of Germany in Berlin on May 8, 1945.
On this 70th anniversary, in the aftermath of an economic war with a recession, we see good news coming out of Europe. While there are on-going issues in Greece and sprinkled skepticism elsewhere, we have seen indications of slow but steady growth, shadowing the U.S.’s similar climb out of the recession, including:
- The European Commission projects real GDP to grow by 1.5% in the Euro area in 2015 (up from 1.3% in its February report), and 1.9% in 2016; the EC attributes this growth to an increase in domestic demand as consumer spending rebounds and oil prices decrease, leaving more money in the hands of consumers.
- Despite the problems in Greece, there appears to be some strengthening around the edges of Europe with business sentiment at an eight-year high in Ireland and Spain’s consumer confidence reaching an all-time high in April 2015.
- The strengthening of the Euro from a low of $1.05 in April 2015 to $1.12 today implies currency traders have increased confidence in the Euro and the Eurozone.
While there is some good news coming out of Europe, the question of the EU’s ability to implement structural reforms (that would decrease unemployment and spurn growth) remains the fundamental issue – perhaps a Marshall Plan for economic reform?