The European economy is (finally) en fuego!
After years of underperforming both the American and UK economies, the eurozone’s economy has picked up its pace of growth significantly in recent months. According to data out last week, it appears as though the momentum is carrying through to 2017: business activity is growing at the fastest rate in almost five years, according to influential survey.
This is early data, and still needs to be confirmed, but the eurozone economy is undoubtedly on the up. There are, however, major elections in France, Germany and, possibly, Italy, among other countries and investors are wary of the associated political risks (particularly regarding Marie Le Pen in France, who has proposed a “Frexit” from the EU).
What happened in Britain?
Many UK-based banks reported their financial results this week – and the results were mixed. HSBC saw its stock fall more than 5% after disappointing profits; the bank is seen to be at a particular risk of any slowdown in global trade as a result of President Trump’s policies.
Barclays also reported a lower-than-expected profit, although business at is investment bank was significantly revived. Despite the results this week, stock prices of most banks are up more than 50 per cent over the past eight months, partly because interest rates have gone up (which means banks can charge more for the loans they make).
Kraft Heinz, the large American packaged foods giant, briefly tried to buy Unilever, the maker of products such as Marmite and Dove soap. Kraft’s bid was backed by Warren Buffet and Brazilian investment firm 3G, which is quickly becoming known for buying companies and aggressively stripping out costs in order drive up profits.
Unilever, however, indicated that it was not interested in being bought and, rather than attempt an unfriendly takeover, Kraft (and Buffett) quietly retreated.
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