EU 28 Current Account Surplus 13.4 billion Euros

The account for the balance of payments for the European Union (EU) has recorded a surplus of 13.4 billion euros in April according to Eurostat, this was down from the previous month’s excess of 17 billion euros, but ahead of the additional 13.4 billion found for the same month a year ago.

The surplus of the goods account month on month decreased down to 12.1 billion euros from 15.5 billion euros, this was repeated with the surplus of the services account, which fell to 10.9 billion euros in April, compared with 12.1 billion euros for March.

Overall, the 12 month cumulated current account for the period ending in April 2016 recorded a surplus of 177.1 billion euros, compared with 136.8 billion euros for the 12 months to April 2015.

The surplus of the goods account for the same period increased by 124.6 billion euros, in contrast to the €50.7 billion euros that was found last year, while the surplus of the services account fell by a slender margin to 157 billion euros from 154.3 billion euros.

 Bleak Outlook for Euro Area Inflation say HSBC

 HSBC have highlighted many factors which they believe will continue to result in downward pressures on inflation, following the announcement by Eurostat yesterday that the annual rate of inflation in the euro area and the EU is at minus 0.1% for May.

They pointed to the experience of Japan, who in their attempts at recovery have struggled with deflation, arguably they say due to the chronic levels of corporate debts that exists on companies’ balance sheets, which has been ongoing for two decades.

The global banking giant said that many euro area companies suffer from a similar problem, with additional suffering from the banking sector due to non performing loans, that are likely to constrain natural economic growth, plus a prolonged period of low inflation usually results in firms getting used to not raising their prices.

Another major concern from HSBC is the lack of influence that Germany is displaying in driving the euro area out of deflationary patterns, despite wage growth increasing, there is little evidence that German companies are reporting any improvement in pricing power.

Households are making sure that they are saving their higher wages to combat low interest rates, while inflation stays low in Germany the bank argued, deflationary pressure will continue on other countries such as France and Italy, resulting in a further loss in competitiveness.

Germany and France Report Mixed Business Start Up News

 The two most powerful economies in the euro area have reported differing news on business start ups.

In Germany, for the first quarter of this year, there was an estimated 34,000 larger new businesses created, despite the increase, the volume of start ups has decreased in comparison with the corresponding period a year ago.

There was 50,000 small businesses founded in the first three months of this year, a considerable decrease of 11.4 % on the same period in 2015.

Official figures in France has revealed that there was a 2.3% increase in innovating new businesses for the second month running, the rise was due to both sole proprietorships rising by 3.4%, and a hike in micro-entrepreneurs’ registrations of 0.8%.