European Economy: OECD: European Economy Is Slowly Recovering But New Challenges Are Emerg

The European economy is gradually recovering but further policy action will be required to address unresolved legacies of the global economic crisis that are weighing on growth and major new concerns that have emerged, according to two new OECD reports.

The latest OECD Economic Surveys of the European Union and of the Euro Area, presented today in Paris by OECD Secretary-General Angel Gurría, underline the challenges facing European policymakers. Although growth has gradually strengthened, unemployment in many countries is still high, investment remains below pre-crisis levels in most European countries, and credit growth is still sluggish.

The Surveys project EU GDP will grow by 1.8% this year and 1.9% in 2017, while GDP in the euro area will grow by 1.6% this year and 1.7% in 2017.

‘Europe has put the worst of the crisis behind it, but there is still much more to do to support a full robust recovery that benefits all Europeans,’ Mr Gurría said. ‘Most of the recommendations in these two Economic Surveys have one thing in common: they call for collective action by European countries. Cooperative solutions have enabled Europe to leave the worst of the crisis behind it. But continued cooperation is still needed to implement effective solutions to common problems.

The alternative to collective action is not the status quo, but something worse: the risk that Europe will move backwards. This would jeopardise what has been achieved to date by the Single Market and the rest of the EU acquis, decreasing growth and destroying jobs across Europe.’

The Surveys say that countries with fiscal space should use budgetary spending to boost growth. Given the deep cuts in public investment since the global financial crisis, the reports recommend increasing public support for key investment projects. Enacting broad reforms to tax structures and public spending would also favour growth.

Easing financial constraints would bring benefits across the economy, notably to private sector firms considering future investment plans. This will require addressing one of the legacies of the crisis – the resolution of non-performing loans in many countries, which threaten financial stability and act as a drag on bank credit.

 Waivers could be applied to the new Bank Recovery and Resolution Directive rules to help put in place government-supported schemes when non-performing loans are a serious economic disturbance, the Surveys said.

The Surveys discuss the need for additional steps to deepen the single European market, notably with regard to labour mobility, which can be a key tool to reduce unemployment and boost productivity.

Reducing administrative and regulatory barriers in the services sector and speeding up the recognition of professional qualifications from one country to another would encourage internal mobility, the Surveys said.

Read moreL OECD: European Economy Is Slowly Recovering But Legacies Of The Crisis Remain And New Challenges Are Emerging | Hellenic Shipping News Worldwide

European Economy - Peoples Capitalism: Crowdfunding helps Europe’s businesses boom

Peoples Capitalism

Crowdfunding is no longer a niche, it’s booming in Europe. In this edition of Business Planet, from Finland, Serge Rombi finds out how platforms work and what makes a successful campaign.

“Global crowdfunding was more than 30 billion euros last year,” Lasse Makela, CEO of the Invesdor crowd-funding platform, told euronews’ Serge Rombi.

“It’s growing by more than 100 percent per year. And it’s going to be larger than venture capital financing this year.”

In the autonomous Aland islands in the Baltic Sea, a family-run SME produces 100 percent natural lemonade, using only local products.

In 2014, Tony Asumaa – founder of Amalias Limonadfabrik – realised that he needed to expand production and he immediately opted for crowdfunding.

“We chose crowdfunding because it was cheap, efficient, fast and, above all, non-bureaucratic – to get new capital into the company,” he said.

Through Lasse’s platform, Tony won more than 86-thousand euros in equity crowdfunding.
In other words, those who invested in his company are now shareholders.

“We have 163 new shareholders. As our ambassadors, they promote our products, they sell them. Some restaurant owners sell products throughout the country,” said Tony.

Europe’s Economy Strains as Global Slowdown Takes its Toll - by Jill Ward

The euro area is showing signs of strain from the global slowdown.

Weaker growth and deeper price cuts by companies, as captured in a monthly report by Market Economics published Monday, will raise concerns about the health of the economy. They may also increase pressure on European Central Bank policy makers to add to stimulus at their next meeting in March.

Markit said that its composite Purchasing Managers Index for the euro zone fell to 52.7, the lowest in more than a year, from 53.6. In Germany, manufacturing took a hit from falling overseas demand, while the composite gauge for France signaled “sluggish” economic growth.

“Not only did the survey indicate the weakest pace of economic growth for just over a year, but deflationary forces intensified,” said Chris Williamson, chief economist at Markit in London. The data “greatly increase the odds of more aggressive stimulus from the ECB.”

The Organization for Economic Cooperation and Development cut its forecasts for the euro region last week, and ECB officials are reviewing whether their current stimulus program is enough to counter global pressure. They’ve expressed concern that a renewed slump in oil prices is adding to risks that low inflation becomes entrenched.

Markit said euro-region economic growth this quarter may fall short of the 0.3 percent seen at the end of 2015.

“This month’s PMI indicates further deflationary pressures in the euro zone," said Bert Colijn, an economist at ING in Amsterdam. “As businesses continue to charge less for goods and services, it seems unlikely that inflation will pick up in the months ahead, which could be an additional trigger for the ECB to act in March.”

Markit’s German factory index fell to 50.2 this month, barely above the key 50 level that divides expansion from contraction.


Read more: Europe’s Economy Strains as Global Slowdown Takes its Toll - Bloomberg Business