Bershidsky on Europe: Eurozone Output Accelerates

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website
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Here's today's look at some of the top stories on markets and politics in Europe.

Euro area industrial production grows faster.

Industrial output in the euro area increased 1.8 percent month-on-month and 3 percent year-on-year in November, after a 0.8 percent October drop. Growth was surprisingly strong in most of the biggest European economies, Germany reporting a 2.4 percent month-on-month increase and France adding 1.4 percent. Italy was something of a laggard with 0.3 percent growth. Ireland surged, increasing industrial output by 11.4 percent. These data indicate healthier-than-expected economic growth in the fourth quarter. There is, however, some fodder for skeptics in the otherwise strong statistics: The output of durable consumer goods dropped 0.8 percent, a sign that Europeans do not yet feel the effect of the ostensible economic recovery.

Spanish growth up in fourth quarter.

The Spanish economy grew at its fastest pace in six years in the final quarter of 2013, Economy Minister Luis de Guindos told parliament, adding that "for the first time since the start of the crisis we are in a different scenario." The early release of the optimistic growth data will undoubtedly feed into the recent surge of investment in debts instruments from the EU periphery. It's worth keeping in mind, however, that the growth de Guindos is celebrating was only 0.3 percent, up from 0.1 percent in the third quarter. Not bad for a country that spent the last five years in a killer recession, but nothing spectacular as yet. Spain, a country with 26 percent unemployment, has also reported that the number of jobless people has been dropping in recent months, but the drop is due to long-term unemployed dropping out of sight as their entitlement to benefits expires, and to a continued fall in wages. The scenario change from recession to stagnation is positive but hardly a reason for celebration.

EU antitrust authorities investigate film licensing deals with U.S. studios.

European competition commissioner Joaquin Almunia said two of Europe's biggest cable and satellite TV companies - the Sky platforms in the U.K., Germany and Italy and Canal Plus in France and Spain - as well five major U.S. film studios are under investigation for country-specific movie licensing deals. The studios, including Twentieth Century Fox, Warner Bros., Paramount, Sony Pictures and NBCUniversal, make exclusive deals with the pay-TV platforms that allow films to be shown only in certain countries. That means a resident of Belgium cannot subscribe to a pay-per-view service in Spain, and a German cannot use her subscription to a digital content channel while vacationing in Italy. Disney is not part of the investigation: It is already redrawing its licensing contracts. Others should, too: Geographic licensing is a throwback to a pre-digital era. The only reason people are not buying more content across borders is that they are too lazy to use the many available workarounds.

U.K. inflation lowest in four years.

The annual inflation rate in the U.K. surprised analysts by dropping to a four-year low, 2 percent, in December. Inflation was expected to go up to 2.2 percent from November's 2.1 percent. That puts the Bank of England in a quandary: The falling inflation forces it to keep its benchmark rate at 0.5 percent with no way to respond to the development of a real estate bubble. In November, 2013, house prices in the U.K. were 5.4 percent higher than the year before. Bank of England officials have said they would consider raising rates after unemployment dropped below 7 percent. It stands at 7.4 percent now, and households are not spending enough to justify tightening credit. The real estate boom appears to be speculative and therefore alarming.

Monaco to expand into the sea.

The principality of Monaco, one of Europe's tiniest states, densely populated with some of the world's most affluent people, has chosen the French construction company Bouygues for a project that will expand its territory by 15 acres. Bouygues will fill in part of a 20-meter-deep haven at the cost of $1.36 billion and will in return be allowed to build luxury housing on the reclaimed land. The project is a sign that the European real estate market is reviving: Monaco scrapped a similar project in 2008.

(Leonid Bershidsky can be reached at

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