The stats and the markets concur: Europe is no longer an economic basket case

Next year, if forecasts prove right, no European country will see its economy decline



The politics may be all over the place, with the various Europhobe parties set to gain one-third of the votes at the European elections later this month, but the economics have actually become quite favourable in the EU. The recovery is becoming more broad-based almost by the day and while there is nothing like the surge in growth that is happening in the UK, it is stronger than most people expected even a few weeks ago.

You can catch a feeling for this in different ways. One is official statistics. The European Commission has just published its forecast for this year and next, which expects growth at 1.2 per cent and 1.7 per cent for the eurozone in 2014 and 2015, with growth at 1.6 per cent and 2.0 per cent for the EU as a whole. So while it is true that the non-euro members are doing much better than the eurozone ones, there is certainly a gradual improvement across the board.

Even the laggards are doing better. Last year nine of the 18 eurozone countries saw their economies shrink. This year only one, Cyprus, (along with Croatia, which is outside the eurozone) is expected to do so. Next year, if these forecasts prove right, no European country will see its economy decline.

A second way of looking at what is happening is to see what the financial markets think. They too are much more positive, indeed to judge by what has been happening in the last few days, even more so than the economists in Brussels. Here is one figure: 2.998 per cent. Yesterday, at lunchtime, Italian 10-year bond yields fell below 3 per cent for the first time since Bloomberg began collecting data in 1993. The equivalent Spanish debt is trading around 2.95 per cent. By comparison UK 10-year gilts are at 2.66 per cent, and US treasuries 2.60 per cent. That is not much of a premium for lending to Italy or Spain rather than the UK or US. The markets are saying that they think Italy and Spain are good for their money; they are not going to go bust after all.

This will be small comfort for the hundreds of thousands of young Italians and Spaniards who have had to emigrate to Germany or the UK to get a job, or indeed for British home-owners in Spain who have lost half their life savings in the collapse of the property market. But it is the job of markets to look forward and they are implicitly saying that better times are ahead.

Or take a third indicator of economic health – car sales. I like car sales because: (a) they are hard numbers – you can count how many cars are sold – and (b) they are the biggest single consumer purchase, so they tell you a lot about consumer mood. In the first three months of this year sales in Spain are up nearly 12 per cent, Italy nearly six per cent, and in France just under three per cent. Now this is poor compared with Britain, where sales are up nearly 14 per cent, and the absolute level of sales is still the second worst since the present series of data began in 2003. But at least the numbers are heading up, not down.

So what does this mean for the European elections? You can argue that because the benefits have been so slow to start coming through, and so limited, that voters will continue to punish the political elite that imposed such austerity on them. It is hard not to have sympathy with that. Yet it would be intellectually dishonest not to acknowledge that in its own terms, European policy has been successful. The euro has, for the time being, been saved. The banking system has, for the time being, been saved. Growth, of a sort, has been rekindled. Even if one-third of the voters implicitly or explicitly reject the policies of the elite, a majority will still support them.

The big questions about the future of the European economy come later. As we move through to the 2020s and see China overtaking the US and continental Europe being left further behind (for demographic reasons as much as anything else) it will be the time for European people to question whether the project has really increased their wealth and security, and if not, what should be done about it. Meanwhile, however, the acute phase of the crisis is clearly past. Those of us who believed that the eurozone would get through its first crisis, but not its second, have been right so far.

The best of British?  It takes a foreigner to recognise it

So Angela Ahrendts, she who revived Burberry before going over to  Apple as its head of retailing, gets a welcome package that includes £40m worth of Apple shares. She started her new job last week. Well, it is a lot of money even by US corporate standards but it reflects both her marketing genius and Apple’s need to make retailing work better for it, particularly in the emerging world.

At Burberry Ahrendts took over from another American, Rose Marie Bravo, who had started the recovery of the brand, and took it further by pioneering the push  abroad, with three-quarters of Burberry stores now  in the emerging world.

Inevitably with pay levels like this the focus turns to the person, all the more so since she is the first woman to become a member of Apple’s executive team. But from an economics perspective the story so far is surely rather different. It is the way in which it takes an outsider to spot the true value of a British brand and understand how to sell that brand to the world.

Thus it takes the Tata group to know how to sell Jaguars and Land Rovers to China. It takes the Chinese to appreciate the value of the MG brand and sell that, on a much smaller scale, to China too. The chief executive of Diageo – with drinks brands from Johnnie Walker to Gordon’s – is an Indian businessman, Ivan Menezes. Bentley  has been revived by VW and its chairman, Wolfgang Schreiber, is German. British Airways is led by  an Irishman, Willie Walsh. BP has been rebuilt after the catastrophe in the  Gulf of Mexico by an American, Bob Dudley.  And so on.

An explanation? I don’t have one but ponder this somewhat uncomfortable thought. It may well be that foreigners are better able to appreciate both the strengths and weaknesses of British brands, but maybe it is also that British brands are better respected around the world than British business leaders?

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Trainee Recruitment Consultant - Pharmacuetical

£20000 - £25000 per annum + OTE £40,000: SThree: Real Staffing, one of the UK'...

Associate Recruitment Consultant - IT

£20000 - £25000 per annum + OTE £40,000: SThree: Computer Futures has been est...

IT Technician (1st/2nd line support) - Leatherhead, Surrey

£23000 - £25000 per annum: Ashdown Group: IT Technician (1st/2nd line support)...

Business Analyst

£300 - £350 per day: Orgtel: Job Title: Business Analyst Rate: £300 - £350 per...

Day In a Page

Read Next
The Independent journalist James Moore pictured outside Mile End underground station in east London  

The true cost of being disabled goes far beyond just the physical

James Moore

Palestinian natural resources lie beneath this terrible conflict

Shawan Jabarin
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform