The Eurozone rebounds from recession with moderate growth, while the UK experiences a surge in mortgage approvals amid economic uncertainties. The US grapples with wage increases and inflationary pressures, impacting the Federal Reserve’s policy decisions.
The Eurozone has reported economic growth in the first quarter of 2024, marking a recovery from a brief technical recession experienced last year. According to Eurostat, France and Germany, the largest economies in the region, both grew by 0.2%, while Italy and Spain recorded growths of 0.3% and 0.7%, respectively. Contributing factors to this growth include decreased energy prices, reduced inflation, and rising real wages, alongside potential future interest rate cuts by the European Central Bank (ECB). The positive economic indicators suggest further growth for the remainder of 2024.
In the UK, mortgage approvals in March reached an 18-month high, as reported by the Bank of England, with the count rising to 61,300. This indicates the housing market’s resilience, despite ongoing economic uncertainties and climbing interest rates. Lenders like NatWest and HSBC have increased rates on some mortgage products, yet the effective interest rate on new mortgages has seen a decline, providing some relief to borrowers.
Across the Atlantic, in the United States, the Labor Department noted a 1.2% increase in worker compensation for the first quarter of 2024, up from 0.9% the previous quarter. This rise in pay and benefits, however, is contributing to concerns over inflationary pressures which could influence the Federal Reserve’s monetary policy. The Fed is currently maintaining a cautious stance, emphasizing the need for clear signs of inflation easing before considering any rate adjustments. This scenario presents a potential challenge in balancing economic growth against inflation control.
