A Rocky Week To Come

Europe’s fourth largest economy, Spain, grew the third quarter with year-on-year value of 3.40%. On a quarterly basis, the economy decelerated to 0.80% meeting previous and expected values. Readings obtained on Thursday indicate the highest rise since the last quarter of 2007, the beginning of Europe’s financial crisis. Household consumption increased by 3.50% and investment up 6.50% on the year. Government spending also rose by 3.00%. Fridays CPI values showed consumer prices are expected to contract by -0.30% beating October’s values of -0.70% and median estimates of -0.50%. As employment rises in Spain, its economy is among the fastest growing in the Euro Area this year. Low energy prices, easier financing conditions boosted in large part by the ECB, coupled with tax breaks have shown a substantial boost in economic momentum. The EURUSD ended the last week lower, tumbling below the 1.0600 threshold to 1.0596 before the close of trade.

United Kingdom quarterly GDP fell to 0.50% compared to the 0.70% of previous period but year on year values remained stable at 2.30% expansion. The value is said to be mostly driven by the growing of domestic spending. Household demand rose by 0.80%, a 17^th consecutive rise, along with Government spending jumping to 1.30%. The biggest contributor was noted to be in land improvements and infrastructure, granting gross capital formation a rise of 7.20%. The UK economy has been helped with low inflation and a growth in wages which have added to consumer confidence despite the anemic global economic backdrop. Weak global demand and the Pound gaining in strength has weakened export competitiveness, however, the recent losses in the Pound should provide some tailwinds. Economists however, choose to label the latest economic conditions as transitory with spending gains forecast to boost stable and sustainable growth.