{"id":120670,"date":"2023-10-29T09:03:03","date_gmt":"2023-10-29T09:03:03","guid":{"rendered":"https:\/\/cottontailsonline.com\/?p=120670"},"modified":"2023-10-29T09:03:03","modified_gmt":"2023-10-29T09:03:03","slug":"eurozone-wont-recover-for-years-says-expert-after-ecb-interest-rates-decision","status":"publish","type":"post","link":"https:\/\/cottontailsonline.com\/world-news\/eurozone-wont-recover-for-years-says-expert-after-ecb-interest-rates-decision\/","title":{"rendered":"Eurozone wont recover for years says expert after ECB interest rates decision"},"content":{"rendered":"

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Eurozone economies have been warned the currency union will be \u201cweak\u201d for years after the European Central Bank opted to freeze interest rates.<\/p>\n

Bob Lyddon, a UK-based tax specialist, was speaking after the ECB announced its decision yesterday, with President Christine Lagarde dismissing any prospect of a bounceback in the last months of 2023.<\/p>\n

It marked the bank first meeting with no change after 10 straight increases dating back to July 2022 which pushed its key rate to a record-high four per cent.<\/p>\n

The ECB joins the US Federal Reserve, Bank of England and others in holding borrowing costs steady – albeit at the highest levels in years – as inflation has fallen.<\/p>\n

Ms Lagarde commented: “The economy is likely to remain weak for the remainder of this year.<\/p>\n

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“But, as inflation falls further, household real incomes recover, and the demand for euro area exports picks up, the economy should strengthen over the coming years.”<\/p>\n

Mr Lyddon, founder of Lyddon Consulting Services, told Express.co.uk: \u201cThe first question is why household real incomes should recover.<\/p>\n

\u201cThat requires both employment levels and wages to go up more than inflation and any rises in taxes.<\/p>\n

\u201cThat happens when the economy is strong, the government is taking a smaller slice of the cake, and there is resultant shortage of labour.<\/p>\n

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\u201cWith a weak economy, no genuine labour shortage and a government that needs to be fed with more money, the preconditions for household incomes to rise in real terms are absent.\u201d<\/p>\n

Mr Lyddon also highlighted an inherent assumption embedded in the ECB\u2019s analysis of the current economic climate, which he characterised as \u201cwhen the demand for euro area exports recovers\u201d.<\/p>\n

He asked: \u201cWhat is the destination of those exports?<\/p>\n

\u201cThe non-euro countries of the EU? The UK? The USA? Russia, with the embargo? China, with the problems in its real estate market?<\/p>\n