By: Mike Campbell
The world’s major economies all established financial support measures to prop up their financial sectors and other key businesses during the worst of the global economic crisis. It was obvious from the outset that these measures would be a temporary support. According to Eurostat, the European Union’s statistical body, the Eurozone economy grew by 0.4% in Q3. Eurozone growth predictions for next year have been revised upwards and should now lie between 0.1 to 1.5% (from -0.5 to 0.9% previously). Against this backdrop, the European Central Bank (ECB) has decided that the time is right to start withdrawing some of these measures now.
The ECB has decided to withdraw some of the short-term loans which were intended to stimulate bank lending by increasing liquidity within the Eurozone. ECB twelve month loans will be discontinued from this month and the six month loans will come to an end in March 2010. ECB president, Jean-Claude Trichet, warned that the recovery process would be “uneven and subject to risks”, but this is hardly news. The ECB have again left interest rates at 1%; the lowest level in the bank’s 10 year existence.
Figures for the US Q3 productivity rate have been revised downwards from 9.5% to 8.1%. The productivity rate is a measure of the hourly output of a worker, but the revised rate still represents the best rate since 2003. The rate will no doubt have been influenced by the decline in the US workforce since the onset of the global economic crisis. It might be that good news is on (or perhaps just over) the horizon on the job front. The number of (new) unemployed, claiming benefit for the first time fell by 5000 to 457000 – which means that things are getting worse less quickly than before.