Forex Investment and Currency Trading

Once again, the economic fortunes of the major European economies are diverging. But this time, the tables have turned. Until two years ago, Britain and Spain had outperformed their European peers, boosted by major real estate booms and the benefits of previous labour market reforms. Now, the real estate boom in Spain and – possibly – Britain threatens to turn into an almost US-style slump. Britain has also squandered some of its erstwhile structural advantages by 10 years of excessive expansion of its government sector. As a result, Spain is now on the verge of recession while the BoE is steadily easing interest rates in Britain to stave off the risk of stagnation. Meanwhile, Germany and – to a lesser extent – France continue to defy the global slowdown. During its lean years earlier this decade, Germany had reformed its labour market. France followed suit, albeit haphazardly. Although they cannot decouple from the global turmoil and the strong euro, they now enjoy heightened resilience. The lessons are obvious: economic outperformance built on extraordinary real estate booms is unsustainable and will end in some mean reversal; conversely, those countries that meet the challenge of temporarily weak growth with structural reforms and improved labour market flexibility over time can propel themselves to the front of the growth league for mature economies.