This week’s interest-rate cut is a milestone for the European Central Bank.
For the first time in two decades policymakers get to start a monetary-easing cycle without having their hand forced by a financial emergency. Instead, investors are signaling confidence about the euro area and keeping yields in check.
But despite the calm on the surface, the economy is starting to see the consequences of problems that have been decades in the making. Increasingly eclipsed by the dynamism of the US and the rise of China, the euro zone is languishing with anemic growth, weak productivity, poor demographics, and bloated public finances in key countries.
Benign markets and a recovering economy offer Brussels and national capitals rare breathing space to try to address those challenges. If politicians — navigating European elections this week — don’t take advantage to deliver growth-enhancing reforms and public-finance repair soon, the region risks sliding ever further into irrelevance.
“Without a major jolt, the European Union will become a much-diminished global power, leaving the US battling it out with China for economic supremacy,” said Jamie Rush, chief European economist for Bloomberg Economics.
https://www.bloomberg.com/news/arti...omy-facing-many-problems?srnd=homepage-europe
Another leg higher for European + US stock prices?
For the first time in two decades policymakers get to start a monetary-easing cycle without having their hand forced by a financial emergency. Instead, investors are signaling confidence about the euro area and keeping yields in check.
But despite the calm on the surface, the economy is starting to see the consequences of problems that have been decades in the making. Increasingly eclipsed by the dynamism of the US and the rise of China, the euro zone is languishing with anemic growth, weak productivity, poor demographics, and bloated public finances in key countries.
Benign markets and a recovering economy offer Brussels and national capitals rare breathing space to try to address those challenges. If politicians — navigating European elections this week — don’t take advantage to deliver growth-enhancing reforms and public-finance repair soon, the region risks sliding ever further into irrelevance.
“Without a major jolt, the European Union will become a much-diminished global power, leaving the US battling it out with China for economic supremacy,” said Jamie Rush, chief European economist for Bloomberg Economics.
https://www.bloomberg.com/news/arti...omy-facing-many-problems?srnd=homepage-europe
Another leg higher for European + US stock prices?
