Blog: Dave LeggettEurope's crisis has not gone away

Dave Leggett | 4 January 2013

The crisis in Europe may have quietened down lately, but it is far from resolved. The big structural questions about the single currency and mutualising liabilities concerning government debt and the banking sector have not gone away. They seem to have been parked. Meanwhile, austerity budgets are now in place, consumers and businesses across the region under pressure. Uncertainties on when things will be noticeably better persist. It's a case of economic recession or growth so low, it may as well be recession.

Some of the full-year car sales data coming in now makes for grim reading. Italy's car market last year was just 1.4m units. It should be over 2m units in a normal year. How much lower could it go? 1.2m this year?

And even Germany - with its relatively strong economy and low unemployment - is seeing weakness in car demand. I liked the way Matthias Wissmann, VDA president, summed up the view from Germany: “The state debt crises in the eurozone have been dominating the headlines for over two years now,” Wissmann said. “This never-ending topic depresses the mood and generates a wait-and-see attitude. People who are confronted at breakfast day in, day out, with the question of whether this or that EU country can still pay its debts – and what the corresponding rescue measures might mean for German taxpayers – are not going to hive off to their local car dealer in the afternoon full of eager anticipation about buying a new car."

At least the US situation is cause for some cheer.  And it is good to see they are still partying on the other side of the world.



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