Morale is keeping euro low, suggest analysts

Morale in major European economies is running low and having a poor effect on the currency exchange value of the euro.

Several lots of data have come out of the euro zone this week, none of which bode well for the future of the single-currency zone.

France has experienced its fastest cut in spending in two years alongside widespread strikes in the oil refineries and the aviation sector.

Munich-based Ifo Institute report yesterday (February 23rd) that Germany's business confidence had slipped in the index from 95.8 to 95.2 in January, representing the first decline in ten months.

The figures went against a forecast rise.

With unemployment still a major problem across Europe, all of these economic troubles combine to give a poor outlook for the near-future of the currency.

Ifo economist Klaus Abberger told Reuters: "The first quarter will be hit hard by the weather and economic activity could even decline."

Another economist from BNP Paribas, Eoin O'Callaghan, told the news agency: "It has been a disappointing day for euro zone survey data, which has at the least, offered further evidence that the euro zone's recovery is proving a subdued affair."

Posted by Thomas Smith

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