24 January 2014

A tale of two Europe's

The outlook for the UK economy in 2014 is encouraging but a lack of growth, deflation and unemployment will see the Eurozone continue to fall behind its neighbour in 2014.

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​As business and political leaders gather at the World Economic Forum at Davos next week to discuss the threats to the global economy, my thoughts are firmly on Europe. 

Despite growing optimism around Europe's economic fortunes, the Eurozone is not out of the woods yet.

Looking through the prism of the three major threats to the global economy - a lack of growth, deflation and unemployment - what emerges is a growing schism between the UK and the rest of Europe. 

The outlook for UK growth is now better than that of the Eurozone (even our conservative estimates anticipate 2% growth in the UK versus 0.8% for the Eurozone, the latter being the best case scenario); inflation has hit the Bank of England target for the first time in four years, while the rest of the Eurozone faces deflationary pressures; and UK unemployment is moving downward in stark contrast to the Eurozone where it remains steady at 12%.

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