Small and midsize companies in South European countries like Spain and Italy reported the most trouble making a profit, maintaining revenue and getting loans, according to the E.C.B. survey of 7,500 firms. Underscoring the plight of people in Southern Europe, the Spanish government said Friday that economic growth in coming years could be even worse than previously thought.
But the survey also pointed to signs of trouble in Northern Europe, further raising expectations that the E.C.B. might be all but compelled to cut its main interest rate in the coming week.
“It seems very difficult for the E.C.B. to leave the monetary policy stance unchanged,” Marie Diron, an economist who advises the consulting firm Ernst Young, said in an e-mail. Economists expect the E.C.B. to cut its benchmark rate to a record low of 0.5 percent from 0.75 percent when it meets Thursday.
U.S. economic growth continues to stand in contrast to Europe’s. The American economy sped up in the first quarter of this year, with output expanding at an annual pace of 2.5 percent, according to a U.S. Commerce Department report Friday. That number was lower than the 3 percent forecasters had been expecting, but it is a rosy picture compared with the doldrums in Europe.
Until recently, companies in Germany and other North European countries had come through the euro zone crisis relatively unscathed. But the E.C.B. survey found that a growing number of companies in Germany, the Netherlands and Austria were suffering, with more and more reporting that “finding customers” was now their biggest worry.
Even if the 17 countries in the euro zone are more and more in the same economic boat, though, tensions among their leaders are rising.
In a position paper prepared for a coming political convention, and quoted by the French newspaper Le Monde, leading members of France’s Socialist Party complained of what they said was “the selfish intransigence” of Chancellor Angela Merkel of Germany.
Ms. Merkel, the document said, “cares only for the bank depositors of the upper Rhine, the trade balance in Berlin and her electoral future.”
Ms. Merkel raised eyebrows Thursday when, in remarks to German bankers, she said that Germany should have higher, not lower, interest rates. It is considered taboo for a political leader to try to put pressure on the E.C.B.
In the E.C.B. survey, conducted in February and March and which focused on firms with fewer than 250 employees, companies throughout the euro zone reported declines in profit, except in Germany and Austria. Even in those countries, though, earnings were flat.
Along with separate data from the E.C.B. that showed a dip in bank lending last month, the survey adds to a growing body of evidence that a recovery of the euro zone economy may not materialize until next year. The figures suggest that, while fear of a breakup of the 17-member euro zone has ebbed, the currency union is at risk of long-term stagnation.
Meanwhile, a document has come to light in which Jens Weidmann, president of the German central bank, the Bundesbank, argued that some measures by the E.C.B., which are largely responsible for the decline in financial stress, would be illegal.
Mr. Weidmann made the critique in an opinion he submitted in December to the German Constitutional Court, which is considering a complaint against Germany’s participation in measures designed to keep the euro zone together. The 29-page document was confidential until Handelsblatt, a German business newspaper, published it Friday.
Mr. Weidmann wrote that the E.C.B. would violate its mandate if it bought government bonds of euro zone members on a huge scale, as it has pledged to do if needed to keep down borrowing costs for troubled countries.
The E.C.B. has not needed to buy any bonds because the promise alone has been enough to calm financial markets. In one sign of receding financial tension, bank data compiled by the E.C.B. and published Friday showed no sign of a flight by depositors following turmoil in Cyprus last month, except in Cyprus.
Article source: http://www.nytimes.com/2013/04/27/business/global/27iht-eurozone27.html?partner=rss&emc=rss
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