Where can the West find growth?

The release this morning of GDP data for the EU shows that growth is going to remain elusive for developed economies for some time to come.

A further quarter on quarter fall and a year on year figure of -0.6% shows just how dire things remain. German Factory Orders also released this morning were appreciably better than expected but this merely highlights how bad things are in the rest of economy that is inexorably linked by the single currency.

Now that the immediate issues of the debt crisis have been postponed it remains to be seen what can be done to promote the growth that is the only way that a sustainable recovery can be achieved.

Mrs Merkel has said in a number of speeches recently that growth is the key driver for economic recovery. Of course never having had to stimulate the German economy to create growth she doesn’t actually have any practical experience.

Austerity for the foreseeable future is not going to be a sustainable policy and expansion through public spending is the only way that confidence can be promoted. Confidence will lead to investment, investment to growth and growth to recovery.

Interest rate announcements have now become very boring!

Little can/will change for some time to come. It would be interesting to know when Central Bankers would predict when they see rates actually being increased. It has to be measured in years but I would hope less than five! Maybe three?

In the U.S. things are not a lot better than in Europe from the growth perspective but the economy has a very different dynamic. Stimulation has become a byword and the U.S. Treasury is not really into austerity (the debt mountain is a testament to that). I hope that the current generation are not merely providing case studies for future MBA candidates in how they are handling their respective economies.

Real people with real problems are being affected on both sides of the Atlantic! It is truly tragic to imagine that there are youths in Spain and probably other European countries who will NEVER work! Not through an institutional lethargy but simply due to the lack of opportunity. This is the terrible legacy of this crisis and may be the single issue that creates a sufficient groundswell if not to pull the Eurozone apart then to create sufficient support for programmes that create jobs.

It is clearly the responsibility of every politician in every country to support such programmes. The EU centralized in all the wrong ways and also decentralized in all the wrong ways. If there is commitment to this experiment then it needs total commitment, harmony on taxation a single Central Bank and job creation schemes that stretch from Malaga to Oulu and Bruges to Larnaca.