Fork in the road as U.S. outperforms Europe
Slowly but surely, the global economy is witnessing a modest parting of the ways as the United States pulls ahead of a euro zone still shell-shocked by its debt and banking crisis. To be sure, a slew of reports this week will show neither America nor Europe in great shape. But while advance October surveys of purchasing managers are likely to confirm the euro zone stuck in recession, U.S. economic growth probably picked up to a 1.8 percent rate in the third quarter.
The UKs budget deficit has shrunk according to the latest set of official British public sector borrowing data. The figures revealed that the UK’s public sector borrowing requirement unexpectedly fell from £10.8bn in August to £10.7bn last month; analysts had been anticipating an uptick to £11.7bn, so in relative terms this was a ‘good’ figure. The government wants to wipe out the structural budget deficit by 2015, but analysts say this is unlikely. Public borrowing for the financial year-to-date now stands at £38.6bn, compared with £62.8bn this time last year. This takes total government net debt to £1,065bn, equivalent to 67.9% to total annual economic output.
Spain yet again denies the need for aid. Rajoy told his fellow European leaders at a summit in Brussels that his nation doesn’t feel under any pressure to request a bailout despite the markets growing increasingly annoyed with the delays and uncertainty. The European Summit has also failed to provide clarity on potential financial aid for Spain. Moreover European Union leaders face two months of tough bargaining on money, power and the future governance of the euro zone before they can boost confidence that the existential threat to the single currency has faded.
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