Eurozone Unease Spikes As Single Currency Turns 20

By Andrew Hammond

Spain begins a general election campaign this week after Prime Minister Pedro Sanchez called an early general election last Friday, the third such ballot in as many years.

However, far from being an exception, the latest political uncertainty in the eurozone's fourth-largest economy comes as there are mounting signs of political instability and stagnating growth in other large European economies such as Germany, France and Italy.

With the eurozone 'celebrating' its 20th anniversary this year, the single currency area stands on the brink of yet another downturn. And this even before the possibility next month of a no-deal Brexit which could be a significant economic shock across the continent.

The Spanish election, to be held April 28, comes only seven months after Sanchez was sworn in as the nation's prime minister

And the political instability in the country is mirrored in France, where President Emmanuel Macron remains under severe pressure from the so-called 'yellow vest' protests; Germany where Chancellor Angela Merkel's long period in power is in its twilight; and Italy where Prime Minister Giuseppe Conte was forced last Friday to dismiss speculation that reported tension between coalition partners, the 5 Star Movement and The League, could cause it to collapse.

Moreover, this political angst, alongside the continuing drama of Brexit, appears to be contributing toward flagging European economic growth.

Last Wednesday, for instance, it was announced that eurozone factories saw a production slump in December for the second month in a row.

Industrial production was 09 percent lower in December than November, according to the Eurostat statistics agency, the fourth fall in six months.

And overall, the eurozone grew by only 02 percent in the last three months of 2018.

Italy fell into recession in the final three months of 2018, in a blow to the populist, rightwing government which has promised to rejuvenate growth.

And it was announced that Germany only very narrowly avoided a recession after the nation's GDP was flat in the October-December quarter, following a contraction from July to September

It is in this economic angst that the latest Spanish political setback comes with deep uncertainty over the nation's future governance.

This is because the ruling Socialist Party (PSOE), which currently leads polls with around 30 percent of support, is nonetheless still widely blamed for the fact that it was also in government...