Germany slows EU nosedive

Tim Wallace
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STRONG German and British confidence figures out yesterday helped stabilise the EU’s economic outlook – though other states are still weakening.

The European Commission’s economic sentiment indicator rose 0.6 points in the Eurozone to 93.4 in January – the first rise since March 2011, though the index remains well below the long-term average of 100.

Germany remains the only country registering sentiment above its long-term average, as the figure jumped from 104.3 to 10.6.6 this month.

The UK also experienced a large jump, from 88.6 to 93.6, while the EU nations as a whole rose from 91.6 to 92.8.

However, sentiment in Italy fell from 85.4 to 84.3 and in France declined from 93.5 to 91.4.

Yesterday, French Prime Minister Francois Fillon announced the country’s economy is now expected to grow by 0.5 per cent in 2012, not the one per cent previously forecast, while Spanish GDP figures show the country’s economic output fell 0.3 per cent in the final quarter of 2011.

Investor confidence in Portugal slumped, with yields on 10-year bonds soaring to euro-era highs of 17.393 per cent.

“This surge in yields reflects growing scepticism that private sector involvement in debt restructurings will only be applied in Greece,” said Capital Economics.

However, Italy sold €2bn (£1.67bn) in 10-year bonds at yields of 6.08 per cent – higher than the figures seen on secondary markets last week but well below the 6.98 per cent paid on 29 December.