Domestic spending still weak

Q3’s GDP release confirmed that the euro-zone economy finally exited recession last quarter. But the expansion was largely down to a slower pace of destocking than in Q2. Unfortunately, despite the recent increase in consumer confidence there was no sign of a pick-up in household spending. In the short term, we remain optimistic that the global upturn will support the recovery in the euro-zone. But with the domestic economy still in a fragile state, the euro-zone’s economic revival could begin to falter next year.