Friday, April 29, 2005

Europe economy officially heading south.

EU: Unemployment up in France, business and consumer confidence down all over the place. This does not help the EU Constitution vote coming up in May.

April 29 (Bloomberg) -- European business confidence dropped to a 19-month low, French unemployment rose to the highest in more than five years and the German government cut its growth forecast as the region's economic outlook deteriorates. An index gauging confidence among 35,000 executives fell to minus 9 this month from minus 8 in March, the European Commission said in Brussels today. France's jobless rate rose to 10.2 percent in March, the Labor Ministry said in Paris. Germany cut its estimate of 2005 growth to 1 percent from 1.6 percent. ``There's a new economic slowdown in France and in Europe, which has been exacerbated by oil prices,'' said Amelie Derambure, an economist at Credit Agricole SA in Paris. ``We can see that the dynamic of growth to come will be too weak to prompt job creation and that spending will be below what could be expected.''

The reduction in the German growth forecast comes three weeks before Chancellor Gerhard Schroeder faces a regional election in North Rhine-Westphalia, the country's most populous state. Support for his Social Democratic Party fell 1 percentage point to 34 percent, according to an April 26 poll by Emnid of 1,000 adults, which would be the party's worst result in that state.

In France, rising unemployment and slowing growth are hampering President Jacques Chirac's efforts to persuade voters to back a new European constitution in a May 29 referendum. Confidence in Chirac fell to the lowest since he was re-elected in 2002, a survey by the CSA polling company showed yesterday.

``Pressure on lawmakers will further increase,'' said Janwillem Acket, chief economist at Julius Baer Holding AG in Zurich. ``Germany, Italy and France all have a miffed population because of sluggish growth.''

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