Benchmark
The Euro-Area Recovery Is Unbalanced But Not the Way You Think
Received wisdom is that the recovery is short on investment. An ECB study that it’s consumer spending that needs more stimulus
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The euro area’s recovery isn’t suffering from a dearth of investment. Quite the contrary, in fact, and the current level of investment is unsustainable without more consumer spending.
This is the conclusion of a study published on Friday by European Central Bank economist Philip Vermeulen. It runs counter to the standard narrative of the region’s upswing: a consumption-driven recovery that relies on the weak euro and on central-bank stimulus, but is sorely lacking the investment needed to put the economy on a long-term path of expansion.