What is the key investment message overnight? I wouldn’t be more upbeat on Europe despite German investor sentiment rising for the first time in 2014. Germany is by far the strongest economy in Europe and its recent malaise was always going to be short-lived given its trade exposure to the fastest growing economies in Asia and the recent depreciation of the Euro. While Germany avoided recession by a whisker in the September quarter despite waning consumer spending, the country has relatively low government debt in Europe (although it remains above the global average), low unemployment and a huge current account surplus of 7% of GDP. However, Germany should not be content that things are trending the right way, and needs to do a lot more to stabilise the world’s largest trading bloc. Indeed, increasing government infrastructure spending, which can support employment growth, increase efficiency and earn an economic rate of return, would be highly beneficial. This would lead to lower unemployment, increased productivity, would help ease debt burdens and would help alleviate deflation by boosting demand. All that is required here is a political will. Regards, Matt Sherwood Head of Investment Markets Research
Posted on: Tue, 18 Nov 2014 21:59:14 +0000
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