Leading indicators for the European economies improved somewhat at the end of 2011 and that alone was good news following the substantial weakening posted in the months before.
That said, the recovery is not out of the woods yet and 2012 will still be a year of cumbersome economic recovery.
Unemployment is unlikely to show substantial declines and further austerity measures will once again extract their economic tolls.
France Tough year ahead
The French economy showed its resilience in 11Q3, but we expect the negative effects of the debt crisis to become more visible in the coming months. The small increase in the December PMI figures is a bright spot, but no reason for much optimism. Job creation stagnated at the end of last year and also the outlook for the labour market is not too promising.
Spain Back in recession
In 11Q3, export growth managed to keep the Spanish economy out of recession. But the available economic data for 11Q4 point to GDP contraction in that quarter. For the first quarter of this year we also expect GDP to fall, which would mean that Spain will experience a double-dip recession. As a result, we expect the jobless rate to continue its upward trend.
United Kingdom We started off 2012 in a jolly mood
We kick-started the new year with a slew of positive news. December's leading indicators were stronger than expected, which indicate that the economy may have gained a bit of momentum going into 2012. The planned discretionary fiscal consolidation measures in 2012/13 will continue to weigh on output even if they are half as big as 2011/12. Inflation dropped further in November 2011 and we expect this trend to continue this year.
The Netherlands Recession inevitable
Economic signals suggest that the economy is still at amber. Consumer confidence dropped to a point lower than the trough in 2009, exports the key growth driver so far declined in October for the first time in two years and unemployment is back at the peak of January 2010. Also, the wind chill factor is lower than in 2009: whilst purchasing power is set to suffer in 2012, it was still rising in 2009.
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