Euro area recovery ‘on the way’

There are good signs that the eurozone is starting to emerge from its crisis, according to investment firm Skandia.

Head of asset allocation Rupert Watson noted that the rejection of plans for a permanent rescue fund by Germany's constitutional court "paves the way for the €500 billion (£403 million) bailout fund championed by Angela Merkel".

He added that this is just the latest in a series of items of good news, including the announcement of limitless short-term debt purchasing by the European Central Bank and the confirmation by the European Commission, the European Central Bank and the International Monetary Fund (IMF) that Portugal's deficit reduction programme is working.

Other positives include the IMF's praise for the "strong programme implementation'" of Ireland's austerity plan and the rise in peripheral bonds (even in Greece), making it easier for governments to pay their creditors.

The significance of all this for Britons who may be struggling with their debt in the current economic climate is that an improvement in conditions in the eurozone could have a positive knock-on effect on the UK.

With less uncertainty encouraging more investment and therefore growth, Britain's main trading partners on the continent are likely to be demanding more UK-made goods and services, boosting the economy.

However, this will not happen overnight and at this stage Mr Watson has simply been talking about the beginning of the end of the crisis, rather than the complete re-emergence of strong and sustained growth.

People who are struggling with what they owe may therefore find it wise to seek help such as a debt management plan now, rather than wait for an economic recovery in the future.

Although there may be better days ahead, a survey by Moneysupermarket.com published this week to mark five years since the collapse of Northern Rock revealed that 18 per cent of consumers believe the good times will never return, while 47 per cent believe it will be a long time before matters improve significantly.  

Posted by Paul Thacker