Business confidence in Germany Declines on Intense Snow

Business confidence in Germany in February dropped for first time in 11 months.

The decline is explained by extremely cold weather this winter which resulted into closing of unfinished constructions constraining work in most construction sites. The index, which measures business climate in Germany, Europe`s first economy, in January slid to 95.2 from 95.8 in December. The lowest point in last 26 years was marked in March 2009 when German business confidence index dropped to 82.2.

After an economic pickup in the third quarter recovery in the first Europe`s economy halted in the fourth quarter of 2009 as unexpected snow and extremely low temperatures dampened construction making the companies stop hiring new employees. Nevertheless, increase in global demand encouraged German exporters who managed to trim its losses.

According to the Bundesbank, Germany`s central bank, the economy is expected to grow at 1.6 percent pace compared to 5 percent slump in 2009.

Yesterday die Spiegel reported that the Minister of Finance of Germany prepared a plan of bail out to Greece of about $20 bln. Germany in cooperation with other EU countries is expected to help Greece suffering from budget crisis.

Solution for Greece`s Budget Deficit Is Found

Today European leaders came to the agreement aiming to help resolve the problem of 13% budget deficit in Greece.

According to this agreement, Greek government will receive lending facilities. Thus, the financial crisis in this country may be avoided. The EU leaders pledged to take “determined” action to struggle against the worst crisis in 11-year history of Euro. Greece's attempts to cope with its exploding debt has added to worries that the country might default. The EU President Herman Van Rompuy said: “We fully support the efforts of the Greek government and their commitment to do whatever is necessary including adopting additional measures.”

In order to safeguard financial stability in the region the EU leaders pledged to bail out Greek economy as here the problem of one euro-zone country becomes the problem of all. This step is considered historic in last ten years since the single currency was introduced. Euro zone leaders had hoped to keep Greece off the summit agenda. But they had to include it as worsening market conditions showed that Athens's problems could spill over to other EU countries.

Next week, the Ministers of finance of the EU countries will gather to discuss issues over Spain and Portugal also suffering from high budget deficit and increasing unemployment.

The agenda including all major economic events can be found at Economic Calendar Page.