Business, Finance & Economics

European economic news: today's round-up


AAA ratings of sovereign debt. France will keep hers, says rating agency Fitch



Let's start with the good news: Ratings agency Fitch announced France would keep its AAA rating for the rest of the year. A Fitch spokesperson in Paris said, "Fitch maintains its position from December. In the absence of important shocks that could be linked to a strong worsening of the situation in the eurozone, Fitch does not foresee modifying its negative outlook (on the ratings) before 2013."

Now, it's Europe, let's get to the bad news. In London, Fitch's managing director, David Riley, said Italy was the country that was most at risk of a downgrade. "The future of the euro will be decided at the gates of Rome," Riley told reporters.

The country's A+ rating could be lowered as soon as the end of January.

The Portuguese central bank has forecast the country's economy will contract by by 3.1 percent and then stagnate in 2013.

Greece: Bank statistics for the month of November show total deposits in Greek banks are now 17% lower than the same month a year ago, at just below €173bn, down from €176.4bn in October. Some of that shrinkage is due to families and businesses eating into savings, but some of it - how much? - has to be from people getting their euros out while they can in anticipation of Greece leaving the single currency.

Meetings: Tonight IMF chief Christine Lagarde and German Chancellor Angela Merkel are meeting.

And how did all of this jumble of news effect the markets?  The FTSE gained 1.5 percent on the day and its cousins in Frankfurt and Paris also were up.

A report at Business Week has this explanation “The markets are giving the European leaders a little bit of time,” said Elwin de Groot, a market economist at Rabobank Nederland in Utrecht, the Netherlands. “It’s smart they’ve started their meetings earlier in the year. It gives the impression that they are on the ball, and that’s giving a bit of a positive impulse to the market.”