UK Economy Inches Closer to Triple-Dip Recession, German Data Improve

Nigel Thomas
25 Jan, 2013
New York City

European Central Bank said 278 banks are scheduled to repay loans next week issued at the height of crisis two-years ago. UK economy declined at a faster pace in the December quarter. German business climate index improved in January on rising expectations.

Market indexes advanced in 13 of the 17 nations across the region after the European Central Bank said 278 banks will repay loans totaling 137.2 billion euros next week. The early repayment of loans and higher than expected amount indicated at least parts of the euro zone financial system is getting healthier.

The latest index of business confidence released by a private research institute pointed to a sharp improvement in the outlook for business.

The Ifo business climate index increased to 104.2 in January from 102.4 in December, ahead of expectations set by economists.

The index pointed to an improvement in the domestic economic outlook in Germany, the powerhouse of the euro zone but businesses are also concerned of the brewing currency wars as Japanese government targets weaker yen.

Chief Economists Klaus Wohlrabe estimated economy to grow 0.2% in the first quarter from the fourth quarter and sees smaller chances of the economy slipping into a recession.

UK’s economy contracted at 0.3% annual rate in the final quarter to December according to the latest data released by the Office for National Statistics. The service industry was flat and output of production industries declined 1.8%, manufacturing fell 1.5%.

UK rebounded from a nine-month recession in the third quarter when the GDP increased 0.9% and may fall into a recession if the economy shrinks again first quarter in 2013.

Moody’s, S&P and Fitch, all three major rating agencies have placed the UK’s debt on negative watch.

Spain’s producer price inflation declined to 2.7% in December from 2.8% in November according to the statistics agency in Madrid.

Yesterday, the National Statistics Institute in Madrid said jobless count increased to 6 million in the final quarter of 2012. Unemployment rate peaked 26.02% from 25.1% in the third quarter.

Hungarian retail sales dropped 4.1% in November from a year ago month according to the Budapest based statistics office. The total sales fell after furniture and electronic goods sales dropped 16% in the month and books and computer equipment fell 9%.