European business activity falls to near three-year low
Published: 24th May 2012 11:04:29
Activity at European businesses hit a near three-year low in May, according to a survey by Markit.
Its index, based on a survey of purchasing managers in the manufacturing and service sector, fell to 45.9 in May, a 35-month low.
In response, the euro fell to $1.2515 against the dollar, a 22-month low.
A summit of European leaders on Wednesday evening failed to boost confidence, as leaders disagreed over how to tackle the crisis.
French President Francois Hollande pushed for pan-European bonds, that would allow struggling nations to raise money at much lower interest rates.
But Germany says it will oppose such a scheme until there is more budget discipline across Europe.
The political crisis in Greece was also under discussion.
For the single currency and the European project these are days of uncertainty”
EU leaders said they wanted Greece to remain in the eurozone, but European Council President Herman Van Rompuy said it should "respect its commitments".
Thursday's economic reports show that concerns over Greece are having a broader economic impact, according to economists.
Markit's chief economist, Chris Williamson, said his firm's research indicated that the European downturn "gathered further momentum in May".
"The survey is broadly consistent with gross domestic product falling by at least 0.5% across the region in the second quarter, as an increasingly steep downturn in the periphery infects both France and Germany," he said in the report.
Activity at French and German factories fell to the lowest level in almost three years, according to the Markit survey.
"The flash PMI figures for May look horrible and provide a clear warning that eurozone GDP will almost certainly show a contraction in the second quarter after stagnating in the first quarter," said Martin Van Vliet, from the bank ING.
"It's not good," said Peter Dixon from Commerzbank.
"The German ones were particularly disappointing, as we had been expecting some more buoyancy.
"It clearly indicates that the evaporating sentiment that we have seen in recent weeks, as the Greece crisis has intensified, is having a big impact on the economy."
A separate report from Germany's Ifo showed that business confidence fell sharply in Germany in May.
The Ifo business climate index, which is based on a survey of 7,000 executives, fell to 106.9 in May, down from 109.9 in April.
Investors have been seeking the safety of German and UK government bonds. Prices of these bonds rose, driving interest rates on 10-year UK and German government debt to record lows.
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Harvard CitationBBC News, 2012. European business activity falls to near three-year low [Online] (Updated 24th May 2012)
Available at: http://www.ukwirednews.com/news/1430639/European-business-activity-falls-to-near-three-year-low [Accessed 20th Apr 2014]
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With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com
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