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The ECB is spending €80 billion per month to create growth and infltation

  • Monday, May 22, 2017

European equities have advanced since the start of March as the ECB released further details of its asset purchasing programme covering both government and corporate bonds. The new programme raised the monthly purchase value from €60bn to €80bn and will run until March 2017.

GDP data for Q1 showed the Eurozone economy expanded by 0.6% up from a 0.4% forecast. This was mainly driven by French and Spanish companies. Particularly pleasing was that the Eurozone unemployment rates fell to 10.2% in Q1. This is the lowest level of unemployment since August 2011. This GDP growth is the strongest since 2008 and is better than both the US and UK for the same period.

The positive GDP figures were accompanied by a drop in inflation. This highlights the challenge facing Europe. The continent can really do with both growth in the economy and inflation, but inflation fell to -0.2% in April mainly due to lower oil prices. The improving domestic demand, supportive ECB policies and now rising oil prices are likely to put upward pressure on inflation going forward.

This GDP growth is the stronge since 2008 and is better than both the US and UK for the same period


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Chartered Financial Adviser

Chris is a Chartered Independent Financial Adviser and leads the investment team.