France and Greece to shun austerity in favour of growth solutions
The new French President, François Hollande, has wasted no time in setting out his solution for addressing the economic problems facing the nation and appears to have an alternative view on how to solve the crisis, as he noted: “Europe is watching us; austerity can no longer be the only option.” However, while optimism sweeps certain sections of France, Mr Hollande must act quickly to reassure key European partners that he will face up to the considerable challenge he’s inherited.
In Greece, voters shunned the two parties that form the current coalition Government, prompting the need for another General Election next month, in a clear sign that the EU-demanded plan for a further €11.5 billion of cuts at the end of June is widely opposed by the vast majority of the nation. Reaction to the Greek result from the key eurozone powers has been predictable, with Angela Merkel immediately warning Athens to stick to the reforms agreed under the original bailout plans.
Also in this week's bulletin...
- Despite the Dow Jones index reaching a four-year high, disappointing employment data from the US meant that equities suffered a muted end to the week.
- Negative sentiment was compounded by investors increasingly taking the view that the economy is not yet showing sufficient signs of weakness to warrant a further round of quantitative easing from the Federal Reserve.
- Whilst Southern Europe continues to be mired in political and economic uncertainty, Ireland’s continued recovery suggests that the solutions employed when the crisis first struck have provided a solid and sustainable base for the economy to build upon.
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