Ramsey, one big benefactor to European cos. is the strong US$ that helps facilitate exports. As many countries here depend on it, exports are running very strong: witness Daimler, BMW, Porsche.
The local economies are mainly in the doldrunms, apart from the UK and Spain. The UK has the least business regulation, Spain is profiting from strong foreign investments, not the least from the tourism sector and people actually buying vacation homes there. This leads to increased infrastructure spending, etc.
France and Germany has skyhigh unemployment. Were it not for the strong exports, I'm pretty sure we had a recession now.
The things I see is that the individual customer/cititzen is in pretty bad shape (apart from the ones working in better paying jobs in financial services and manufacturing), but the corporate sector is in fine shape: cutting down on spending, laying people off, saving from manufacturing in cheap labour countries.
It is the big corporations who rule economically over here nowm, more than ever. I think they still play catch-up to the latest technologies: for example, Internet and Intranet is still expanding like crazy here, because we normally are behind the U.S. by about 4 years or so I'd say. I see their spending and upgrading continuing.
Growth over here is achieved on the back of the "working class" consumer. The general hope is that the good export results etc. will finally trickle down into the pocket of the invidual consumer, but I don't see this happening. The trend to downsizing and leanness is still all the rage over here now: witness the many mergers in banking (SBC/UBS) and now drug cos. Smith-Kline and Glaxo. For these reasons I see unemployment rather rising still in France and Germany, because labour legislation and company founding laws are still quite inflexible vs. the US or UK, so people hesitate to become entrepreneurs like with you where some 11 mio. new jobs have been created. Job insecurity is still high here. Once out of job you have a problem unless you have excellent credentials, but then they will not let you go in the first place.
To answer your question, yes, I do see corporate Europe continuing strong, but a lower dollar could hurt. I don't see a dramatically lower dollar for now as EMU is not all settled yet.
Hope this helps, I tried to put something up quickly.
Thomas |
