Europe November 2004

• The United Kingdom saw its Q2 GDP rise 1.4 percent compared to Q1, while the country’s unemployment rate dropped 0.1 percent points from July to 4.7 percent (data is compiled every other month). The unemployment rate is a drop of 0.4 percent compared to August 2003.
  
  
• German unemployment in September stood at 10.7 percent, up 0.1 percent from the previous month. The number of new unemployed workers increased by 27,000, twice what was forecast. Economists in Germany believe the jobs number indicates companies remain reluctant to hire, even though overall economic signs have been pointing up.
  
  
• France’s annualized growth rate of 3 percent beat the euro-zone average by about 0.1 percent, according to the National Institute of Statistics and Economic Studies of France (INSEE). The INSEE credits “brisk household consumption, notably of manufacturers, accompanied by an accelerated recovery in investment” for the rise. The INSEE noted rising oil prices add uncertainty to future forecasts, and continued higher prices would “flatten the slope of the recovery without causing a downturn.”RICAS
  
• European finance ministers at the September European Central Bank (ECB) meeting agreed to not adjust fiscal rules governing the euro too radically after most central bankers asked for conservative changes earlier in the month. At a press conference after the meeting, ECB president Jean- Claude Trichet said, ”Let’s improve implementation. Let’s not change the wording of the regulation.”
  
  
• Trichet also told the European Parliament that Hungary’s government should not be able to increase its influence over the country’s central bank, as the country is proposing. Under the plan, two vice presidents of the Hungarian central bank would be removed from the council that sets monetary policy and interest rates.
  
  
• Ottmar Issing, chief economist of the ECB, told an ECB conference new members of the European Union should not adopt the euro currency until their economy is ready for it. While Issing believes use of the euro for new members will lead to further trade and financial integration, he also thinks
  countries that take on the euro too soon could lose those benefits.
  
  
• A member of the Bank of England told the BBC the UKeconomy may be growing at a greater rate than numbers released last week suggested. Although economic growth slowed to its lowest rate since the first quarter of 2003, Richard Lambert said he doesn’t believe the growth rate is as slow as the numbers suggest.
  
  
• In late October, Turkey revealed its new currency, which will go into circulation on Jan. 1, 2005. The new lira comes after 30 years of economic crisis, including hyperinflation for much of the 1990s, although the inflation has eased somewhat since exceeding 100 percent in the mid-1990s. The government hopes the new currency will stabilize things.
  
  
• The Economy Ministry of Spain said in late October it is keeping its GDP target for 2005 at 3 percent, up from 2.8 percent in 2004. Deputy Prime Minister Pedro Solbes targeted oil prices as a reason for the increase, although he opposes any cuts in fuel tax and instead favors reduced use of oil products.