One very large industrial segment in Germany, the machine builders, are forecasting for their industry segment a sales growth of 3% in Germany and 5% world-wide! All-in-all good news.
EU Commission estimates an GDP growth of 1.4% for year 2014 and the following year 1.7%.
Cautious positive tones can be heard from EU politicians - actually very cautious tones though.
EU economy is since several years like a highly engineered Formula 1 engine or Nascar engine, but some how the fuel isn’t flowing through the injection nozzles into cylinders and misfiring (from Brussels) is causing severe underperformance.
At the same time the EU “SME engine” is performing relatively well!
Now the new threat to growth is the extremely low inflation turning into deflation. EU controls very tightly and sanctions, if low inflation rate targets, set by Brussels, for EU members states are not achieved. The mantra was and is, anything goes as long as it is saving.
EU is supporting the banks for their exclusive rights to bring money on the “streets.”
Wake up EU, the banks haven’t been doing it since the last several years. Nothing has changed in their attitudes since then.
Every child to grandma and grandpa in EU is putting aside every cent they have. Homeowners are paying their debt back as fast as they can. There is little money left for SMEs to earn.
So SMEs must pay from declining prices their debts back to banks. The banks are sitting on this cash and not giving the money back into real economy.
So go figure what is going on!
This is what European Central Bank should do now in order to finally be in sync with the real economy and that SME machine builders will reach their growth forecast:
- Crank the wheel of the Euro money printer much faster
- Throw, literally, money on the streets (take a sunny day though)
This would open the “clogged nozzles“ of the EU economy again.