European equities: a good year

Article Abstract:

European equities are likely to perform well in 1996, according to Morgan Stanley. Interest rates are likely to be reduced to offset the impact of tight fiscal policy. A rise in the value of the US dollar is likely to help boost economic activity later in 1996, as could strong capital spending by companies. France, Germany and Spain are likely to perform especially well, due to lower rates of interest in France, and a rise in the value of the dollar benefiting Germany, while Spanish utilities and banks should be aided by lower interest rates.

Stock-exchange, Stock exchanges

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What if?

Article Abstract:

Goldman Sachs sees European monetary union (Emu) as likely to start on schedule but the impact of a possible delay should be considered. The reaction of markets depends on whether the new date for Emu is seen as likely to be achieved. A delay is likely to be linked to low economic growth which would in turn need lower interest rates, while fiscal policy would have to be tighter to meet targets for Emu. This is likely to lead to a lower value for European currencies in relation to the US dollar.

Monetary unions

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Labour flexibility

Article Abstract:

Labor market flexibility is promoted as a cure for unemployment, but the mainland European system of a more regulated labor market still allows markets to adjust. UK and US companies may shed jobs, while mainland European companies carry out adjustments internally through changes in working hours and the like. Europe has still failed to create more jobs in the services sector to compensate those lost in manufacturing and agriculture.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Labor Regulation & Services, Unemployment, Labor law, Labor policy

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