- Clemens Fuest, ZEW President
Now all the talks are about a possible recession in the Euro zone, as well as in its so-called growth engine—Germany, as the latest data from the region does not offer any reason to think otherwise. German investment morale deteriorated further in October, with the ZEW's index of investor and analyst expectations, which is designed to forecast economic developments in the coming six months, plunged to minus 3.6 in October from 6.9 in September. That is the 10th month of drops and the first negative reading since November 2012. Meanwhile, two leading European economies, Germany and France, clash over public spending policy, as politicians gather in Luxembourg for a second day of the meeting. While Germany intends to lower the deficit to nearly zero next year, France has said that its budget deficit would exceed 3% of GDP target and will not be lowered before 2017. France called for Germany to spend more on investment and infrastructure projects, whereas German officials blamed French for spending more than it should.
While politicians are arguing about deficit target, the ECB's pledge "to do whatever it takes" to save the Euro area goes on trial. The Court of Justice will weigh whether the central bank overstepped its powers in 2012 with the scheme to buy the debt of stressed countries if needed. In case the Court decides the OMT is not in line with the EU treaty, it would mean the Euro's end.
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