Non-euro countries hit by EU construction decline
by Daniel Mason
European Union leaders will begin a week of key meetings on the debt crisis against a backdrop of a worsening economic outlook, with the latest figures for the construction sector showing output falling even in the eurozone core – although non-euro area countries were hit hardest.
According to Eurostat, the EU's statistics office, construction output was down 0.5 per cent in the eurozone in June compared with May – the third monthly decline in a row. Meanwhile across the EU as a whole the drop was a more dramatic 1.7 per cent, reversing May's increase of 1.2 per cent.
Non-euro countries Romania, the United Kingdom and Poland posted the worst performances, with their respective construction sectors sinking by 10 per cent, 4.7 per cent 2.4 per cent. But the eurozone's strongest economies were also hit, with Germany and the Netherlands suffering 2 per cent and 1.4 per cent contractions respectively. There was better news for Spain, which saw a rise of 1.3 per cent, and France, up 0.7 per cent.
However on an annual basis, compared with June 2011, construction output was down 5.8 per cent in the 27-nation EU and 2.8 per cent in the eurozone, Eurostat said. Last week it announced that gross domestic product in the EU and eurozone shrank by 0.2 per cent in the second quarter, pushing Europe closer to recession and adding to the pressure on leaders to get a grip on the crisis.
Greece looks set to remain the focus of their attention this week. Eurogroup chief Jean-Claude Juncker is due to visit Athens on Wednesday, before French President Francois Hollande and German Chancellor Angela Merkel meet on Thursday. Then, Greek Prime Minister Antonis Samaras travels to Berlin and Paris to hold talks with Merkel and Holland on Friday and Saturday.
Samaras is expected to raise the question of whether Greece might be given a two-year extension to its bail-out programme, giving it more time to implement austerity measures. Germany, though, remains hostile to giving any ground to Greece, with foreign minister Guido Westerwelle saying today that there was no room for "substantial softening" of the terms of the bail-out.
The troika of the European Commission, International Monetary Fund and European Central Bank are due to report on Greece's progress in meeting its targets in September. Today the commission said it was "too early" to make any judgement about whether further austerity would be required, after the German magazine Der Spiegel reported that Greece would have to find €2.5bn of additional measures on top of those so far agreed.
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