European Restructuring Monitor Quarterly - 2011, Issue 2
The EU economy continued to grow over the last quarter with more positive data in particular from core economies. Problems of sovereign debt management however persisted in several eurozone Member States and negative economic news from other developed economies tended to more than mitigate any positive momentum arising from the dynamism of the emerging market economies.
Unemployment in the USA had begun to rise again while labour market participation rates were at their lowest level in 25 years. The Japanese economy once again entered a period of contraction following the March 2011 earthquake.
Within the EU, sharp contrasts remained between a fast-recovering, fiscally less-challenged core group of Member States and a more stagnant or recessionary periphery. Yearly growth rates within the single currency zone ranged from -4.8% for Greece to +4.8% to Germany.
These very different trajectories of countries sharing the same currency were felt likely to persist in a context of acute retrenchment in public spending in countries such as Greece, Ireland, the UK, Spain and Portugal. The possible addition of Italy to the list of countries which the markets considered debt-challenged only increased the impression that the foundations of the common currency would require strengthening.