While the European economic recovery probably picked up a bit of speed in the second quarter of the year, there are growing signs that Q2 was as good as it is likely to get. Activity indicators in the euro-zone have softened again in the last few months, with even the recovery’s main engine – the German industrial sector – losing steam in the face of weak demand and the strong euro. Against this background, inflation looks set to remain at very low rates in the currency union, hindering fiscal consolidation efforts in the indebted economies and sustaining the threat of a Japanese-style bout of deflation in the absence of more decisive action from the policymakers.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services