In a sense, it clearly re-emphasises the fears from a few months ago: that the eurozone doesn’t make sense.
This news comes a day after Greece reported GDP that was worse than expected. It’s obvious that when it comes to currency and monetary policy, the interests of Germany and the periphery could not be further apart.
Analysts are talking about this question today.
“Clearly these figures highlight the story of the year, Greece and Ireland are struggling, Germany and France are doing well,” Guillaume Salomon, a fixed income strategist at TD Securities, said.
“The nightmare scenario is a massive slowdown in both core and peripheral but we do not expect that to be the case,” Salomon said. “Before the euro was launched, the smaller nations could have devalued their way to greater productivity, they can do this no longer.”
Steven Major, the head of fixed income research at HSBC said the data is “great news for Germany but others are not doing so well. The tensions with the euro zone could be about to return.”
“This could force the market back to focusing on solvency concerns, Ireland and Portugal will be back in the spotlight next week,” Major added.
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