EC Lowers Euro Area Outlook, Indexes Decline

Arthi Gupta
07 Nov, 2012
New York City

The European indexes edged lower after the European Commission lowered euro area growth outlook for next year. German economy forecasted to shrink in 2013. The Greek parliament is scheduled to vote on the austerity measures today. ING plans to slash 2,350 jobs.

[R]3:10 PM Frankfurt – The European indexes edged lower after the European Commission lowered euro area growth outlook for next year. German economy forecasted to shrink in 2013. The Greek parliament is scheduled to vote on the austerity measures today. ING plans to slash 2,350 jobs.[/R]

The European indexes dropped after the European Commission lowered growth forecast for the euro zone and European Union and expected unemployment to peak next year just below 11%.

The indexes erased early gains after U.S. President Barack Obama was re-elected president for a second term but market focused on the divided Congress and fast approaching fiscal cliff that is set to kick in spending cuts and tax increases of $600 billion from Jan 1.

The Greek parliament is scheduled to vote on the austerity measures today to receive the next tranche of the bailout as the governing coalition struggles to line up support for the measures.

Separately, Poland''s central bank lowered its policy interest rate by 25 basis points to 4.5% and also lowered the rediscount rate by 25 basis points to 4.75%, and the deposit rate to 3%.

In Paris trading, the CAC-40 Index declined 23.47 or 0.7% to 3,455.19 and in Frankfurt the DAX Index edged lower 52.31 or 0.7% to 7,326.59.

The yields on Spain’s benchmark were at 5.81%. Italian 10-year yields were at 4.919%.

EC Lowers Euro Area Outlook

The European Commission in its autumn economic forecast said today that on an annual basis, GDP is set to contract 0.3% in the European Union and 0.4% in the euro area this year. GDP growth for 2013 is projected at 0.4% in the EU and 0.1% in the euro area.

Unemployment is expected to peak just below 11% in the EU and 12% in the euro area in 2013, though with large variations among member States, the reported noted.

German Economic Forecast

Germany’s top economic experts, the “Five Wise Men” predict the gross domestic product to grow 0.8% in 2012 and 2013.

The experts forecast an average annual increase in consumer prices of 2% both this year and next year.

The jobless rate is estimated to rise to 6.9% next year from 6.8% this year.

ING to Slash 2,350 Jobs

ING Group NV said it is accelerating a transformation program at Nationale-Nederlanden in Insurance Europe that will result in a reduction in the workforce of full time equivalent workforce of 1,350 and annual savings of approximately €200 million by the end of 2014.

The lender also decided to simplify its business model and exit some businesses outside its home markets in commercial banking. These measures will reduce the workforce by 1,000 employees and lower expenses by €260 million from 2015 onwards, the financial institution said.