Completing the Q1 euro zone picture

April 7, 2015

Shoppers look for goods in a Karstadt hot deal department store in  in Frankfurt/Oder

Service sector PMI surveys for euro zone members, Britain and others in March will complete a first quarter picture which has generally shown the currency bloc outperforming the United States and China.

We shouldn’t overstate it, growth in the euro zone is unlikely to get anywhere near 2 percent this year though Germany might, but it’s looking a lot better than most expected only six months ago thanks to cheap energy and food putting more money in people’s pockets, a weak euro boosting exports and the ECB’s money-printing programme which aims to pump more than 1 trillion euros into the economy.

The European Central Bank will give a detailed breakdown of the first month of its asset-buying, including country specific data later today.

Italy’s Matteo Renzi hosts a cabinet meeting on his Economic and Financial Planning document which sets out budget plans for the next three years. Economy Minister Pier Carlo Padoan has said the government, which has faced heavy pressure to keep its budget within EU limits, will observe the rules in the most “expansive” way possible.

Greece’s deputy finance minister said Germany owes Greece nearly 279 billion euros in war reparations for the Nazi occupation of the country which would more than wipe out the bailout loans it owes to the euro zone and IMF.

Greek governments have pushed for war damages from Germany for decades but have never officially quantified its reparation claims until now. This does not seem designed to win friends and influence people in Berlin.

Prime Minister Alexis Tsipras will travel to Moscow tomorrow. Russia is in no financial position to help Greece out but the Kommersant newspaper said it may offer Greece a discount on gas deliveries and new loans.

Finance Minister Yanis Varoufakis said a deal with the euro zone on economic reforms for bailout funds needed to be struck by late April when EU finance ministers meet in Riga.

Southern Yemeni militias backed by warplanes from a Saudi-led coalition attacked Houthi fighters across several provinces in south Yemen, driving the Shi’ite rebel forces from some of their positions.

The southern militias’ gains came on the 12th day of an air campaign by Saudi Arabia and mainly Gulf Arab allies trying to stem advances by the Iran-allied Houthis, who control the capital Sanaa and have closed in on the southern city of Aden.

The Kenyan air force said it destroyed two al Shabaab camps in Somalia in the first major military response since the Islamist group massacred students at a Kenyan university last week. Al Shabaab militants denied the camps were hit, saying the air force bombs fell on farmland.

The United States made clear that sanctions on Iran would have to be phased out gradually under a nuclear pact and Barack Obama dismissed an Israeli demand that a deal be predicated on Tehran recognizing Israel.

The framework was a major step toward a final deal but did not include an agreement on the timing and scope of sanctions relief. Many other issues also remain to be hammered out before the end-of-June deadline for a final accord. Iran’s negotiators have interpreted things differently, saying sanctions would be lifted immediately once an accord is signed.

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