There was some good news for Europe last week. The eurozone's battered economy is in growth again, led by Germany (expected) and France (not so expected). July car sales in Western Europe were also up. Let's not get too excited though – there's a long haul ahead with a tepid recovery in prospect. As The Economist magazine put it, neatly, this week: “Even with so much ground to make up [lost eurozone economic output since the last peak], the medium-term outlook is for a lacklustre recovery in the euro area, which will continue to be held back by its dodgy banks.”

Unemployment in Europe remains shockingly high in some countries – 27% in Spain, for example. Even in Britain, with a headline unemployment rate that doesn't look too bad (7.8%), unemployment among the young is worryingly high, part-time work and 'outsourced' work have displaced many old-style full-time staff jobs; and those in work are seeing progressive cuts to real incomes. Job creation and a low level of bank lending to the private sector remain big policy challenges for politicians across Europe. If you have debt, at least interest rates are still low, but for how long?

The return to GDP growth in the eurozone area is welcome, of course, but some perspective is needed. Western Europe's car market is bouncing along at a level comparable with where it was in the early 1990s. Given it is so low – 11.5m units a year, versus last peak of near 15m - could a wave of pent-up demand be building? Many in the industry will hope that slightly better economic news, with some rebounding of business and consumer confidence, could help to take the car market to a tipping point, bring many delayed replacement purchases on-stream. For that to happen, the economic news needs to stay positive.

BELGIUM: Hopes rise for Europe's car market as eurozone edges out of recession

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