Europe’s economy faces new difficulties in 2013

Group of 20 defuse 'currency war'

Available data suggests that the euro zone will face further difficulties in 2013 which confirmed both Spain and Portugal failing to solve the great dilemmas of both sides of the budget austerity. The Spanish Prime Minister Mariano Rajoy that Spain still has a very difficult, especially in the first half of 2013.

Rajoy expressed understanding of the impatience and frustration of the Spanish man in the street in the face of economic recession and high unemployment rate of 25% of the total labor force, but warned that without spending cuts, the budget deficit will increase from 11%, a position unacceptable. On the other side are the agreements signed by Portugal with donor countries for the current year 2012 with respect to the austerity plan concluded to save it from financial crisis to significant risks threaten Bafshalha. The Portuguese statistical agency (if any) to the first nine months of the current year 2012 witnessed a budget deficit of 5.6%, indicating that the rate of year on the overall deficit reached 5%.

Problems Spain

In a speech about what his government has done a year after assuming duties, said Spanish Prime Minister that Spain is not currently planning to request a European rescue package. He added that the country’s economy will continue to recession suffered by them for some time, noting that he expected the situation improved during the second half of next year.

Rajoy demanded the Spanish people lonely and effort in order to avoid all things that can distract the government from out of the economic crisis. Turning Rajoy to the European Central Bank’s decision to purchase debt securities from the secondary market, a mechanism seen as “useful” and does not preclude recourse Spain in the future.

Large contraction

The rate of contraction of the Spanish economy is the fourth largest economy in Europe by 1.5% of GDP while the government expects shrinking by 0.5% next year while the European Union is expected the arrival rate of contraction next year to 1.4% of GDP.

Rajoy said the combination of reforms and spending cuts saved Spain from bankruptcy and expressed the hope that the economic improvement appears in the second half of next year. But the chief Spanish center-right government stressed that Madrid did not ask for rescue loans from the European Union, although it got a 39.5 billion euros in loans to rescue the troubled Spanish banks.

Intense pressure

And Rajoy has come under pressure from international partners, including the European Commission and the European Central Bank and the International Monetary Fund to request financial assistance from the European Union. But he resisted this pressure so far and is assisted by easing the debt crisis in the euro zone. Rajoy was able to delay recourse to the rescue because the European Central pledged to intervene in the market and support the Spanish bond prices pushed Spanish borrowing costs to decline since the summer.

Threats to Portugal

In Portugal did not indicate the center-right government led by Medro Passos Coelho Portuguese Prime Minister so far commented on the new numbers for the budget deficit. The value of the deficit during the first nine months of this year to 6.3 billion euros.

The Portuguese economy has seen a trend toward success after the Troika guaranteed problem of the European Union and the European Central Bank and International Monetary Fund aid package for Portugal in 2011 worth up to 78 billion euros. However, the troika allowed to waive some items austerity last September after a recession in the Portuguese economy and faltering tax collection than was planned.

The proportion of austerity measures target during 2012 from 4.5% to 5% as extended another year plan period ending in 2014.