7 Charts That Spell "Particularly High Uncertainty" For Europe

sinking boat

Photo: Ibrahim lujaz on Flickr

The European Central Bank used the phrase “particularly high uncertainty” (or a similar variant) seven times in today’s monthly report.That said, not all the news is bad. Productivity is increasing, expected GDP growth has been revised up in the short term and trade deficits might be on the decline. (Except in Italy.)

Will Italy sink the boat?

Inflation is a huge concern. Likelihood of higher medium-term inflation (2.5-2.9%) is on the rise.

The ECB has revised GDP up in 2011 and down in 2012.

GDP for the eurozone grew by a respectable 0.8% in the first quarter. In particular, domestic demand seems to be staging a comeback.

Consumer and retail confidence continue to suffer as sovereign debt fears simmer.

Of the 4 largest EU economies, 3 are recovering poorly in comparison to every recession since 1970.

But note that foreign demand for goods is doing admirably...except in Italy.

labour productivity on the whole is higher than it's been in years -- but not everywhere. According to Eurostat, labour productivity in Italy has declined in 12 of the last 15 years. But productivity has been on the rise in Spain while steady in Germany and France.

The ECB finds the biggest risks to growth to be austerity, fiscal tightening, poor performance in US & emerging markets.

But austerity cuts continue anyway.

The ECB is continuing its call for the speedy implementation of IMF/EU policies in Greece, Ireland, and Portugal.

The report seconded ECB President Jean-Claude Trichet's August 7 statement, insisting that governments should expedite adoption of Greek bailout measures and stand behind the European Financial Stability Facility.

So let's say Italy goes down.

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