Complacency Growing over Eurozone Recovery

As the remainder of the European elite finally return to work this year – long after the average person started back in the office – it is clear that any sense of urgency about tackling the eurozone crisis has now long gone. Buoyed by the Nobel Peace Prize award, complacency has set it. The great and the good now believe we are over the worst and that rapid economic recovery is not too far away on the horizon.

Take, for example, the European Commission President José Manuel Barroso himself. Earlier this week, he said: "In 2013, the question won't be if the euro will or will not implode. The credibility of a currency depends on the soundness of the institutions behind it." Many might question whether the European Union institutions are, indeed, sound despite the cast-iron guarantee that the European Central Bank has given the likes of Greece. But not Barroso.

Last week, we reported how the president of the commission was demanding that member states sacrifice sovereignty in exchange for influence on the world stage. In his first speech of 2013, Barroso stated: "Despite the criticism and despite its weaknesses, Europe has been an anchor of stability and cohesion in these difficult times. And the task of building a closer Europe needs to continue. In a world of giants, size matters. In 2050, judging by the growth rates in recent years, no single individual European economy will be among the top 10 world economies. The key is to exchange formal sovereignty for real influence."

Back in November, European Commissioner for Economic and Monetary Affairs Olli Rehn triumphantly stated: "People have blamed the EU and the euro area for being behind the curve. Well, I want to say that those who still predict a Grexit are themselves badly behind the curve." And today, speaking in Ireland, European Council President Herman Van Rompuy stated: "The worst is behind us, in particular the existential threat to the EU."

It almost seems like a case of 'crisis, what crisis' as politicos continue to bury their heads in the sand. The reality is that the winter of discontent is still ever present. Greece might have seen its credit rating upgraded by Standard & Poor's in December but the reality is that we are more than likely just in a period of temporary calm. It does not mean that there will not be another storm once the markets and ratings agencies go on the attack again.

For yesterday, the World Economic Forum flexed its muscles - warning of "economic paralysis" if governments give in to anti-austerity protests and fail to bring the public finances under control. In addition, the latest Eurostat data shows that unemployment in the region climbed to a new record high of 11.8 per cent in November 2012. And Tim Ohlenburg, senior economist at the Centre for Economics and Business Research think-tank, suggests that the eurozone is "trundling further into recession" and still faces a "long and hard trek" on the road to recovery.

Meanwhile, Jonathan Loynes of the Capital Economics think-tank describes the Eurostat data as "fairly downbeat", adding: "While the lull in the debt crisis has continued, the eurozone's economic outlook remains very weak." To add to the evidence of a bleak outlook, chief economist at the Centre for European Reform think-tank Simon Tilford talks of a "lost decade" for the eurozone - while Iain Anderson at the Cicero Group consultancy predicts "continental drift".

So as Barroso and the EU illuminati seem determined to wax lyrical about the green shoots of recovery, they might be wise to express some caution. Since 2008, such optimistic forecasts have only been revised in one direction and that is downwards. Happy New Year, we do hope the pessimists are wrong but we have a feeling they could be right about prolonged recession. Don't break out the credit card in the January sales just yet.