Brian Blackstone Case

In his article entitled, German Strength Shows Europe's Economic Split, author Brian Blackstone discusses the growing divide economically between Germany and the other members of the euro zone. He suggests that Germany "is the only major economy in the euro zone to benefit from the recent improvement in financial markets, which makes it easier for households and businesses to borrow and spend." (Blackstone, 2013) By contrast, other euro zone economies have continued to struggle to make significant economic gains. Other countries like France, Spain and Italy, continue to struggle in make sustainable economic policies as well as fight rising unemployment. As a result, they have not enjoyed the same growth that comes with the increase in the value of the euro as Germany has. In fact the increased value of the euro may in fact act as an "additional brake on activity by making the countries' products more expensive in global markets." (Blackstone, 2013)

The euro-zone purchasing managers' index climbed one point to 48.2 in January, according to data firm Markit. (Blackstone, 2013) According to Markit, Germany's PMI jumped more than three points to 53.6, well above the break-even point of 50 between expansion and contraction while by contrast, France's index tumbled 1.9 points to 42.7 which is its lowest point since March of 2009. (Blackstone, 2013) Mr. Blackstone speaks to Silvio Peruzzo, economist at Nomura International, about the PMI report and he believes the euro zone as a whole is really struggling. Mr. Peruzzo goes on to say that while "it's a slower pace of contraction" in the euro zone at the start of the year, "it's still a recession and that's a concern. If you take out Germany, the euro zone would be in a pretty miserable state." (Blackstone, 2013) The rise in Germany's PMI suggests that, "after an expected decline in fourth-quarter GDP, Europe's biggest economy should return to expansion this quarter, economists said, while France will likely contract." (Blackstone, 2013) German and France happen to account for more than have of the euro zone's economic output.

Outside Germany, the PMI figures suggest a grim outlook for the 17-member currency bloc. There continue to be doubts and uncertainty about the euro zone's northern core countries, which aside from Germany and France includes the Netherlands, Austria and Finland. The third quarter saw the latter three countries each contracting. (Blackstone, 2013) France's unemployment rate continues to be well above 10% which continues to limit customer spending and consumer confidence. Philip Whyte, research fellow at the Centre for European Reform says, "What we have is an extraordinarily weak periphery and a core that is not as strong as many people believe . . . Germany is not providing a huge impetus to the euro zone because it is still reliant on external demand