Global Economics

Signs of European Economic Recovery


Britain and Spain, the two European economies hardest hit by the downturn, are showing some indications of stabilization and even upturn

Britain and Spain, the two major EU states hit the hardest by the economic crisis, have begun to show signs of recovery.

Fresh figures on house prices, manufacturing output and the service sector have ended almost two years of constant bad news in the UK.

A survey by the Royal Institution of Chartered Surveyors published on Thursday (6 July) said house prices could end higher this year than in 2008 amid a "considerable shift" in the market.

The UK's Office for National Statistics said industrial production unexpectedly rose 0.5 percent in June from May, though it is still down 11.1 percent from last year. The increase is the biggest since October 2007 and is mainly due to the car industry.

A report by the Chartered Institute for Purchasing and Supply (CIPS) also showed the services sector in July grew at its fastest rate for 18 months.

The positive news gave a boost to the pound-US dollar exchange rate, with the Bank of England expected to announce on Thursday (6 August) that it will take a pause on efforts to pump £125 billion (€147 billion) into the economy.

Economists remain cautious in their comments on the upward trends, however.

"Overall, these surveys provide encouraging evidence that the economic recovery is building up a decent amount of momentum. But the recovery is still in its early stages," Vicky Redwood from Capital Economics told the UK daily Guardian.

Spain's job figures

In Spain, the number of people filing claims for unemployment benefits fell for the third consecutive month in July, marking the biggest drop since July 2004, according to the country's labour ministry.

The monthly decline of 20,794 people was strongest in the construction and services sectors and seen as a consequence of a massive public investment as well as the current holiday season.

The total number of Spaniards still claiming benefits remains at over 3.5 million.

Spain's unemployment hit 18.1 percent in the second quarter of this year—the highest rate in the 27 country-strong EU.

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