Economic angst envelops eurozone



Greece may be the epicentre of the financial crisis afflicting Europe, but severe tremors are being felt across most of the eurozone as one country after another comes to terms with the need for far-reaching economies. In what has been called a new era of austerity, Europeans have been warned that they will have to work longer, pay more taxes, accept reduced public services and benefits and face continuing insecurity in their employment.

Little more than a year after the Irish Republic, Spain and Portugal were commonly described as the sick men of Europe, few nations are now considered exempt from the consequences of decades of self-indulgence. In Greece, strikes and violent protests greeted the range of emergency measures introduced as the price of the ?110 billion (Dh500bn) European Union and International Monetary Fund bailout after the country's debt rating was reduced to "junk" status. The strings attached to the rescue package leave Greeks facing significantly reduced living standards for years to come.

In Spain, too, trade unions have warned of an explosion of anger against government plans to deal with colossal national debts and a general strike is threatened for September. The Spanish prime minister, Jose Luis Rodriguez Zapatero, has imposed spending cuts, lower civil service pay and labour reforms in the hope of restoring confidence in Spanish finances and easing concern that the country could be forced to seek Greece-style aid. Italy and Portugal are also having to embark on serious belt-tightening.

In France, Nicolas Sarkozy was elected president on a programme of reforms in 2007, but is experiencing the same problems as predecessors in tackling waste and overspending. Workers are already taking to the streets to demonstrate against relatively moderate plans to raise the retirement age from 60 to 62 in 2018. Even Germany, which has the eurozone's biggest economy and is generally regarded as a model of economic prudence and efficiency, has announced that a four-year round of cuts totalling Dh364bn will start next year.

The German chancellor, Angela Merkel, told reporters the country was in serious difficulties and had to take stringent steps to protect its financial future. Planned cuts will affect social-security allowances and military expenditure. There are no plans to increase income or value-added taxes, but air passengers and nuclear-power companies face new levies. Economists are divided on how effective the proposed economies will be in meeting the challenges facing Europe.

Unemployment in the eurozone has already reached record levels, a little more than 10 per cent, and more people are bound to lose their jobs in the coming period of austerity. In a recent survey by the London-based Daily Telegraph, nearly half the 25 UK analysts questioned doubted that the euro would survive in its current form. Few observers seriously doubt that Europe's growing sovereign debt problem was in need of painful surgery.

But it feared that the scale of the cuts, though necessary to calm volatile markets, may trigger recessionary pressures making recovery hazardous. The Forex Live news service has reported recent comments by Christian Noyer, the governor of the Bank of France and a member of the European central bank's governing council, in which he recommended that European countries should tackle their deficits at different speeds.

Greece, he said during a televised debate, was an example of a country that had no choice "but to impose drastic remedies". But he added: "If we adopted very violent austerity programmes everywhere in Europe at the same time, there would be a very negative effect on growth. If everyone did that, it would trigger a recession." crandall@thenational.ae

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
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Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices

Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes. 
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com

Young women have more “financial grit”, but fall behind on investing

In an October survey of young adults aged 16 to 25, Charles Schwab found young women are more driven to reach financial independence than young men (67 per cent versus. 58 per cent). They are more likely to take on extra work to make ends meet and see more value than men in creating a plan to achieve their financial goals. Yet, despite all these good ‘first’ measures, they are investing and saving less than young men – falling early into the financial gender gap.

While the women surveyed report spending 36 per cent less than men, they have far less savings than men ($1,267 versus $2,000) – a nearly 60 per cent difference.

In addition, twice as many young men as women say they would invest spare cash, and almost twice as many young men as women report having investment accounts (though most young adults do not invest at all). 

“Despite their good intentions, young women start to fall behind their male counterparts in savings and investing early on in life,” said Carrie Schwab-Pomerantz, senior vice president, Charles Schwab. “They start off showing a strong financial planning mindset, but there is still room for further education when it comes to managing their day-to-day finances.”

Ms Schwab-Pomerantz says parents should be conveying the same messages to boys and girls about money, but should tailor those conversations based on the individual and gender.

"Our study shows that while boys are spending more than girls, they also are saving more. Have open and honest conversations with your daughters about the wage and savings gap," she said. "Teach kids about the importance of investing – especially girls, who as we see in this study, aren’t investing as much. Part of being financially prepared is learning to make the most of your money, and that means investing early and consistently."

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Power: 360kW / 483bhp
Torque: 840Nm
Transmission: Single-speed automatic
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On sale: September

A Round of Applause

Director: Berkun Oya
Starring: Aslihan Gürbüz, Fatih Artman, Cihat Suvarioglu
Rating: 4/5

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

MATCH INFO

Arsenal 1 (Aubameyang 12’) Liverpool 1 (Minamino 73’)

Arsenal win 5-4 on penalties

Man of the Match: Ainsley Maitland-Niles (Arsenal)


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