Business Confidence in Eurozone Improves

Businesses across the eurozone’s 17 countries displayed greater optimism at the start of 2013, with
the European Commission’s (EC) economic sentiment indicator, its monthly measure of confidence, rising from 87.8 in
December 2012 to 89.2 in January. The news gives the region’s corporate treasurers hope that the lengthy eurozone
crisis may now rapidly be lifting.

The rise was the third in succession and also ahead of expectation,
bringing the index back to its highest level since June although it remains some way below the long-term average
dating back to 1990 of 100.00.

“Pessimism about the future general economic situation and unemployment
trends eased significantly, and respondents’ expectations about their…financial situation and savings over the next
12 months improved,” the EC commented.

The headline measures of confidence in the industrial, services,
retail and construction sectors all rose, and the region’s manufacturers reported an increase in the use of their
productive capacity following steady falls in 2011 and 2012. The improvement in sentiment was particularly strong
in Germany, the Netherlands and, surprisingly, Spain despite data showing the
Spanish recession
deepening in Q412.

The strengthening of business sentiment follows a report earlier this week in the Financial Times that
almost €100bn of private funds had flowed back into eurozone countries worst affected by the sovereign debt crisis
in late 2012, following the European Central Bank’s (ECB)
bond buying
commitment

 last September to unlimited purchases in a bid to resolve the region’s crisis.

A
separate survey, released by the ECB, found that Europe’s expect a continuing improvement in their access to
funding in Q113 as the impact of the debt crisis eases, although they also anticipate credit standards demanded of
companies remaining tough.

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