Continued fears over a Greek exit from the Eurozone helped push the Euro currency lower. It came after the head of the Eurozone finance ministers' group called on Greece to "stop wasting time" and engage in serious talks on reform. Mario Draghi also spoke and expects domestic demand to improve over the course of the year as positive effects of the bond-buying programme gain momentum. He also said that demand for European exports should increase as prices become more competitive, due to a weaker euro.
In Germany the BGA trade association raised its forecast for exports, expecting the weaker euro to offset uncertainty surrounding crises in Greece and Ukraine.It said it expected exports to grow 4.5% this year, up from a previous forecast of 4%. Imports are forecast to rise 4% which would increase Germany's trade surplus to a record €231bn, BGA said.
Yesterday it was announced that France has been granted a 2 year deficit extension. This is the third extension France has been granted since 2009 to bring its budget deficit below 3% of GDP, as mandated by EU regulations. France's budget deficit is expected to be 4.1% of GDP this year, as it struggles with high unemployment. The ministers justified the extension by looking back on the Fiscal efforts made by France since 2013. However, they called for "additional fiscal effort" by the end of April 2015 involving additional structural measures that would allow it to reduce its deficit by 0.2% of GDP.
In the UK Bank Of England Governor Mark Carney spoke in the House of Lords yesterday. He stated that Inflation is likely to remain close to zero for much of 2015. Carney also mentioned that Most of the falls in CPI were due to weakness in commodity prices such as oil. He also stated that he sees UK output growth remaining solid and increasing signs that wages are picking up. A Gentle rise in interest rates is likely and consistent with mandate. Finally Carney said that the medium term risk to financial stability remains from the housing market.
GBP - 09:30 - UK Industrial Production (JAN) expected to rise to 1.3% from 0.5%
GBP - 15:00 - NIESR GDP Estimate
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