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Brexit: euro zone assesses the cost

Wednesday, June 29, 2016 - 01:49

German consumer morale reached its highest level in nearly a year heading into July. But, as David Pollard, reports the ECB sees overall euro zone growth falling thanks to the impact of the UK's Brexit vote.

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Record employment, rising wages, ultra-low borrowing costs. There are good reasons why German consumers should be at their most upbeat in nearly a year. Good news for Europe ... though this latest GFK survey doesn't factor in Europe's other headlines quite yet. (SOUNDBITE) (German) GFK RESEARCHER, ROLF BUERKL, SAYING: "The big uncertainty is of course the international response to Great Britain's departure from the EU." That's a worry for Mario Draghi too. The ECB chief warning Brexit could knock half a percent off European growth over three years. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "There are concerns that even the German economy could begin to see a hit from this, so the ECB is probably weighing up its options and seeing what it can do to provide some sort of cushion in the shorter term." And his compatriot, Italian prime minister, Matteo Renzi, said to be sounding out the EU on support for Italy's banks. Perhaps seeking flexibility on public spending and state aid for a sector groaning under 360 billion euros worth of bad loans. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "That would be what's needed to recover confidence in the Italian banking sector because certainly at the moment most people are very wary of those bank stocks." France's president has his own problems at home too. Eiffel tower workers on strike in a dent to national pride and tourism. And on Tuesday, yet more protests against a controversial set of labour reforms. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "Francois Hollande's room for manoeuvre is getting smaller by the day. He has to maintain his position, but he knows that we don't get these reforms through, the French economy will be the perennial underperformer." French consumer confidence is still high. But with his poll ratings at new lows - just 10 months before an election - Hollande's other numbers just don't appear to stack up.

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Brexit: euro zone assesses the cost

Wednesday, June 29, 2016 - 01:49