Wednesday, June 30, 2010

Spanish prices under pressure until 2012 says Fitch

The Spanish property market correction will run into 2012, with prices down by 30% in total, say ratings agents Fitch.

Spanish property prices haven’t fallen enough, according to a new report from Fitch Ratings.
“Fitch believes that Spanish house prices remain over-valued relative to income thresholds and need to decline further to improve affordability dynamics,” says Rui Pereira, Managing Director and Head of Fitch’s Spanish Structure Finance in Madrid. “The supply overhang of unsold homes, more pro-active sales strategies by financial institutions, and reduced credit availability are also expected to weigh on Spanish home prices over the near-term.”
Fitch question official figures showing that prices have fallen just 11.2% since Q1 2008, pointing to a drop in transactions of 48% between 2006 and 2009. Sales that do go through happen at prices well below the government index, argue Fitch.
Fitch use affordability measures, house price long term equilibrium, and the imbalances of demand and supply to judge the current price of property in Spain.
At the height of the boom, the affordability ratio peaked at 7.7 years (cost of property/gross household income), up from 3.9 years in the years 1995-2000. For sustainable affordability ratios of around 5 years, prices need to fall by 30% from peak.
Fitch expect prices of holiday homes on the coast to fall the most, i.e. more than the 30% average.

Spain bank stress

Spain is demanding the ‘immediate publication’ of the stress tests on EU banks. Minister for Tax and the Economy, Elena Salgado, said that the publication would verify the solvency of the Spanish banking system.The call comes with the markets under pressure as many EU banks are due to repay loans to the European Central Bank this week, a situation which has send many markets, including Madrid, sharply south.Today the markets have taken a breath as in the event the banks requested less money than expected from the ECB. The IBEX 35 is among those to have rallied early today in response, but it fall back later.The Bank of Spain has approved help of 8.035 billion € for the caja savings bank in Spain. Most of the funding will go to the so called ‘cold fusion’ between Caja Madrid and Bancaja which will get 4.465 billion.Meanwhile the Chairman of the BBVA bank, Francisco González, has said that Spain and Europe will exit recession strengthened. However he also warned of the need for the Government to take ‘more measures’ and be ‘more rigorous’.Deputy Prime Minister, María Teresa Fernández de la Vega, said on Wednesday that the government would not be withdrawing the 420 € extra payment made to the unemployed whose standard payments have been used up. Minister for Employment, Celestino Corbacho, had said the subject was under debate in cabinet earlier, but de la Vega said social protection would be maintained.Non-financial companies earned on average 4.8% more than a year ago in the second quarter of the year, according to the Bank of Spain. It comes after a fall last year of 27.9% although the bank notes those businesses are continuing to reduce employment and investment levels.The Portuguese Government is to use its ‘golden share’ to stop the sale of the Vivo telecoms company, which is in the target sights of Telefónica. The sale to Telefónica had obtained support from 74% of the shareholders in Portugal Telecom, but will not now go ahead, even at the offered price of 7.15 billion. Telefónica is really targeting the market in Brazil where Vivo has more than 53 million clients.The so-called TV wars for football coverage in Spain have taken a new turn today with the payment by the Prisa group of 90 million € to Mediapro for those rights. Sogecable, owned by Prisa, has made the payment to the courts in Barcelona as the down payment for the football Primera and Second division TV rights for next season.As VAT rates go up on Thursday with the introduction of the new 8% and 18% rates, gas users also face a 6.5% increase from the same day. A deal has been done not to increase electricity also, but 3.2 million gas consumers who are on the TUR last resource tariff will be paying more.Butane gas is also on the rise, with the normal butane bottle costing 4.7% more from Thursday. This is in addition to earlier increases this year which means a 14.4% increase so far this year.The Euribor rate, used to set most of the mortgages in Spain has ended June at 1.28% after the third consecutive month to see an increase. It’s the highest rate since August 2009, although mortgages which see their annual revision this month will still see a reduction.The European Commission has fined six Spanish steelworks for price fixing. The charge affects 17 groups in total worldwide, and more than half the fine falls on ArcelorMittal.A court in Granada has ordered the Spanish Airports Authority AENA, respect previous wage conditions for air traffic controllers in Granada Airport. AENA was found guilty of not correctly informing workers, with 45 days notice of their changes. However the ruling is open to appeal and AENA has already got in touch with the Andalucian High Court of Justice.Unemployment among university graduates has doubled since the start of the recession in Spain. It had reached 9.4% in 2009 where the EU average is 4.8%.Read more:

The Winker's farewell

I don't normally like to gloat, and it doesn't make up for England's pathetic exit from the World Cup, but the sight of Cristiano Ronaldo not performing and suffering an ignominous exit warms the cockles of my heart.
In the end Portugal tried to contain Spain by playing loads of men behind the ball, whilst Spain probed for the opening which eventually came to David Villa.
Ronaldo was also caught rather charmingly spitting towards the cameraman as he walked from the pitch at the end of the game. What a nasty little piece of work he is.......

UK mortgage lending still subdued

The forthcoming Budget will keep the property market subdued, lenders say
UK mortgage lending remains subdued, according to the Council of Mortgage Lenders (CML).
Its comments came as it said the amount lent in new home loans rose by 7% in May from the previous month to £11.3bn.
Although that was up 10% from a year ago, the level of new lending this year has been low by historical standards.
The CML said higher taxes and public spending cuts to be announced in next week's Budget would probably subdue mortgage lending further.
"The market will inevitably be affected by how policy impacts on the wider economy - particularly on household finances and confidence," said the CML's economist Paul Samter. First-time buyers
In the latest edition of its monthly publication "Trends in Lending", the Bank of England said that lenders expected mortgage borrowing to remain "broadly flat" in the next few months.
"Contacts of the Bank's network of agents reported that demand for housing, especially among first-time buyers, continued to be constrained by tight credit conditions," it said.
"There has been an increase in the number of advertised products, including for loan to value (LTV) ratios of over 75%, which are often used by first-time buyers.
"However, the median LTV ratio on new loans to first-time buyers has changed little over the past six months," the Bank pointed out.
Despite the throttling of new lending due to the continued credit squeeze being experienced by banks and building societies, house prices have risen this year, according to most surveys.
The government's own survey, compiled by the Department for Communities & Local Government (DCLG), suggested this week that prices had risen by 10% in the past year.
The explanation put forward by most analysts is that prices have been pushed higher by a shortage of homes being put up for sale.

Tuesday, June 29, 2010

Latest currency update

From our partners at Foremost Currency Group :-


Last week we saw the Euro reach a high of 1.2210, this as expectations of the UK budget would get Britain back on a sound fiscal footing offering more incentive for investors to cover extreme short positions in the UK currency, thus driving Sterling to its strongest level against the single currency in more than 18 months. The Budget announcement by Chancellor of the Exchequer George Osborne on Tuesday 22 June showed the new UK coalition government is serious about tackling its budget deficit, with tough spending cuts looming we could see Sterling supported in the mid-term. The other important news this week was the rating agency Moody's statement on Wednesday that it would see Britain keep its triple-A rating if the government successfully implemented the tightest budget in a generation. This is seen as boosting the appeal of UK assets among overseas investors and helping the Pound, this as the Euro came under broad selling pressure after the cost of protecting Greek government debt against default rose further, emphasising the revival of Sterling more as a result of Euro weakness rather than Sterling strength.

With the growing volatility in the markets the use of a forward contract can benefit you in eliminating risk and safeguarding your funds. The forward option takes time, interest rate differential and volatility in the market into consideration giving you the option of buying live to the markets on the day by paying a small deposit upfront, with a settlement period for the balance of up to 2 years.

Looking to the week ahead the most crucial news may the House price index (HPI) and Gross domestic product (GDP) announcements in the UK on Wednesday 30 June. The House price index (HPI) delivered by Nationwide bank gives us the change in the selling price of homes with mortgages. The HPI is the UK's second earliest report on housing inflation and the impact tends to be significant, as it is a leading indicator of the housing industry's health and because rising house prices attract investors and spur industry activity, however it varies from month to month. The GDP being the broadest measure of economic activity and the primary gauge of the economy's health as it measures change in the inflation-adjusted value of all goods and services produced by the economy; it may prove to be crucial to the GBP/EUR currency pairing.

With the news on the GDP and HPI in the UK and the growing financial crisis in the Eurozone this week is likely to be another volatile one for the GBP/ EUR currency pairing. See the relevant data releases below for a concise round up of volatile market movers; however it is well worth taking the time for a consultation with an account manager here at Foremost Currency group.

Sterling appreciated against the USD last week following Chancellor of the Exchequer George Osborne’s delivery of a tough but balanced budget and although the measures outlined would mean higher taxes and spending cuts investors reacted favourably towards Sterling.
In the emergency budget Osborne revised down growth forecasts for 2010 and warned that unemployment would reach 8.1%. Strength for Sterling came from the tax policy and despite the VAT increase to 20% in January 2011, tax relief measures on corporate taxation and the fact that the VAT increase would not impact fuel costs were both seen as very positive measures to support economic recovery and stimulate industry in the UK. Further support came from the Fitch rating agency who called the UK budget a ‘strong statement of intent’, rating agencies in the past have heavily criticised the UK debt levels and the positive statement encouraged investor confidence. Moody’s rating agency followed suit the following day and provided additional market confidence after it released a statement saying they felt the UK budget was broadly in line with expectations and addressed all the major concerns on economic growth.
The only other positive remaining event for Sterling last week was the Bank of England minutes that revealed a surprise 7-1 voted on interest rates. MPC member Andrew Sentance voted for a rate hike. Sentance also went on the say that he felt despite current uncertainties it was appropriate to begin to gradually withdraw some of the exceptional monetary stimulus. The minutes boosted Sterling across the board as traders priced in the possibility of future rate hikes and investor risk appetite increased.
Economic data from the US created some safe haven buying of the Dollar as investors questioned whether the European debt crisis had some impact in slowing the US recovery. US Q1 GDP dipped slightly lower than expected but was offset by a strong increase in consumer spending and sentiment, the Federal Reserve Bank kept interest rates unchanged at 0.25% and made no changes to inflation or growth forecasts. Speculation regarding the G20 and mixed economic data was clear as a change in sentiment could be seen in GBP/USD levels as the Dollar closed the week trading near its weekly lows.
In the coming week markets will open to the G20 meeting, although the likelihood of a definitive statement addressing the European debt crisis is unlikely, a lack of unity could unsettle the markets and allow for safe haven buying into the Dollar. With Market confidence restored after last week’s budget announcement and the commitment from the UK government to take aggressive measures to reduce Britain’s deficit, Analysts are now concerned that the lower spending power could have a negative impact on growth and as such could cause further volatility for Sterling. Former BoE member David Blanchflower recently warned of the possibility for a double-dip recession in the UK and this could add to market jitters ahead of the GDP release. For an in depth view into what may affect your currency requirements please see our market data section below and/or contact your FCG account manager for a personal consultation.
This Weeks Data

The weekends G20 meeting will likely have an impact this week, as the EU debt crisis was the focus of discussions over the weekend. Last week we hit a 19 month high against the Euro and a 6 week high against the US Dollar. Any announcements could cause volatility in rates. If a clear plan is agreed to assist the EU that appeases the markets, the currency could strengthen and GBP/EUR rates could fall back away. If however no clear plan is agreed, and investors remain wary of investing in the Eurozone, we could see the Euro continue to remain weak and good buying levels remain.

The main fundamental data for the week is as follows:

Inflation data from Germany the main news today, which is an indicator to measure inflation and changes in purchasing trends. A high reading may cause GBP/EUR rates to fall. Elsewhere we have house Price data for the UK that gives an idea how the overall economy is faring. In the USA we have core personal consumption which again is an inflation indicator.

Today is all about confidence, and the focus is on the EU. We have consumer confidence, industrial confidence, Economic confidence and services confidence. If the measures show they are confident then the Euro may gain. There’s not much to be confident about in the EU at the moment, but developments from the G20 meeting may change this. Later in the day we have UK consumer confidence.

More significant data today – from the UK we have Gross Domestic Product. GDP is considered as a broad measure of the UK economic activity and health. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative. Unemployment measures from Germany and the US today should also be taken into account.
Inflation data is the only UK release of note. With the BoE minutes last week showing a vote for higher rates, a high inflation reading could cause the Pound to rally slightly. Building permits from Australia and commodity prices from New Zealand may affect the antipodean currencies today. In the US, various jobless measures may affect GBP/USD rates.
Producer Prices from the EU will give an indication of future interest rate movements in the UK. There are also unemployment measures for the EU that may affect GBP/EUR rates. The most important release is the non Farm Payrolls from the USA. As these are so hard to predict, the figure often is significantly different than forecast and so can cause big swings in GBPUSD rates. If you need to buy or sell Dollars, speak to us before this release to ensure you are protected.

For more information on the information contained in this report, contact us today:

Tel: 01442 892060

Monday, June 28, 2010

£5 cash machines introduced

So there are a number of £5-only cash machines that have been introduced, in order to get more of the notes into circulation. Retailers complain that £5 notes are hard to come by and difficult to keep. There is also evidence that smaller denominations of notes can help people to budget. Amazing to think that after all these years, it will be possible to go to a cashpoint and just withdraw a humble fiver. Sign of the times, eh?

Ok so the football was rubbish

from an England perspective anyway. So do we now switch to supporting Spain as a default second team, or maybe one of our other European neighbours ?
The way that things have gone in recent times you could be forgiven for wishing ill on places where you may have bought property, particularly given the problems in Spain.
But, we are all in the same boat to a degree, and a positive outlook to the future can be as beneficial in some ways as hard financial reality.
At the moment we are cheering the rise of the pound against the euro, which is good on 2 scores :-
Firstly, UK property owners in the eurozone have more affordability when it comes to paying their mortgages and paying for maintenance etc. And even holidaymakers have more ready cash to spend thanks to the exchange rate.
And secondly, for the Spanish there is an obvious benefit of more Brits able to spend euros in Spain. The exchange rate only affects them if they come to the UK. The flow of people and money has always largely been from UK to Spain, so the Spanish would no doubt prefer a strong pound.
Compared to other eurozone countries the exchange rate doesn't affect, for example, Germans on holiday, although relative prices between the countries do
Thanks for reading

Tuesday, June 15, 2010

9 reasons why Spain is a disaster waiting to happen

1. Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels. Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010. If people aren't working they can't pay taxes and they can't provide for their families.
Also, in the 18-25 age group, there is now 40% unemployment, which is appalling. Spain is trying to address it's labour laws which make it very difficult to emplopy people on full contracts because it is very difficult to sack staff. Many are employed on short term contracts or cash-in-hand. As soon as interest rates begin to rise there will be big mortgage problems for those out of work as their monthly costs shoot up.

2. In an effort to stimulate the economy, Spain's socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009. That is completely unsustainable by any definition.

3. The total of all public and private debt in Spain has now reached 270 percent of GDP.

4. The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor’s, to lower Spain’s long-term sovereign credit rating. These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can't afford to pay more interest on their debt.

5. There are 1.6 million unsold properties in Spain. That is six times the level per capita in the United States. Considering how bad the U.S. real estate market is, that statistic is incredibly alarming.

6. The new "green economy" in Spain has been a total flop. Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a "green economy" would result in a flood of "green jobs". But that simply did not happen. In fact, a leaked internal assessment produced by the government of Spain reveals that the "green economy" has been an absolute economic nightmare for that nation. Energy prices have skyrocketed in Spain and the new "green economy" in that nation has actually lost more than two jobs for every job that it has created. But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented.

7. Spain's national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy. If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues. But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default. The truth is that the Spanish government is caught in a "no win" situation.

8. But even now the IMF is projecting that the Spanish economy is going nowhere fast. The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent. As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain's economy declined by about 3.6 percent in 2009 and things are rapidly getting worse.

9. The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily. In fact, there is likely to be some very serious social unrest before all of this is said and done. On May 21st, thousands of public sector workers took to the streets of Spain to protest the government’s austerity plan. But that was only an appetizer. Spain's two main unions are calling for a major one day general strike to protest the government's planned reforms of the country's labor market. The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain. In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain's socialist government will be forced to call early elections.

So what is going to happen in Spain? The truth is that nobody can predict for sure how things are going to play out over the coming weeks and months. But what everyone can agree on is that the stakes are incredibly high. Speaking at the World Economic Forum in Davos, Switzerland, world famous economist Nouriel Roubini put it this way: "If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster." But right now the entire population of Spain (along with much of the rest of the world) is completely distracted by the World Cup. As long as the Spanish team does well, that is likely to keep the Spanish population sedated. But if the Spanish team gets knocked out of the tournament early that will put the entire Spanish population in a really, really bad mood and that could mean a really chaotic summer for the nation of Spain

Wednesday, June 2, 2010

Exchange rate above 1.20 again

Hurrah - good news for all potential property buyers and mortgage holders in Spain, France, Portugal and elsewhere with the euro.

It seems to have taken a hell of a long time but the exchange rate has broken through the 1.20 mark.

Hopefully 1.20 was a psychological barrier and the rate will continue upwards towards 1.30

Great for anyone buying euros to pay for their mortgage overseas

Economic news from the UK seems to be more positive than the euro-zone, which is now helping the pound

Tuesday, June 1, 2010

Exchange rates market update

The latest market report from our friends at Foremost Currency Group

Pound vs. Euro
Last week was one of relative strength for Sterling as it rallied against the Euro from levels of 1.15 on
Monday the 24th of May up to highs of 1.1872, last seen in June 2009 on Thursday afternoon.
Sterling’s strength did not come from its own strong economic fundamentals however, but more the
dire straits that the euro zone finds itself in and a report from The Organization for Economic Cooperation
and Development (OECD) which said that “due to the continuance of higher inflationary
pressures within the UK the raising of Interest rates by the MPC towards the end of the year were
inevitable.” These two factors combined sent investors flooding back to the pound and soaring against
its beleaguered neighbour.
Sterling’s Climb was however halted abruptly on Thursday, after news that UK consumer confidence
fell for the third consecutive month in May, reflecting uncertainty ahead of the election result and the
prospect of fiscal tightening once a new government was in power. This bad news was also coupled
with a release from The State Administration for Foreign Exchange (SAFE) China's foreign exchange
regulator who deploys the nation's excess reserves. It denied through its website that it was reviewing
its euro-area holdings saying, "Europe has been, and will be, one of the major markets for investing
China's exchange reserves” This single statement and positive tone helped the euro to gain ground
leaving behind its lows of earlier in the week.
With euro zone government debt worries outweighing concerns about the UK, one could expect to
see further downside for the euro, at least in the near term.
On Monday panic hit the currency markets and the Euro started to flounder as it came under renewed
pressure. This time instead of the pressure coming from the euro zones lead economy Germany,
who the week before had undermined the Euro with its ban on short selling, This time renewed
concerns about EU debt crisis continued to surface following comments on Monday from the IMF that
the Spanish economy needs reform. This comment came just as the rescue of Spanish bank Cajasur by
the Bank of Spain sparked fears about the stability of Spanish Banks.
Subsequently four Spanish banks have since announced plans to merge. These concerns have
hampered the Euro and lead investors to seek "safe havens" for their money with the US Dollar being
the big winner and the home of the majority of FX reserves worldwide.
To help combat the negativity surrounding the euro zone and its flagging currency Spain, Portugal and
Italy as well as Greece have all released austerity measures (Where a government reduces its spending
and/or increases fees and taxes to pay back its creditors) “ to try and ebb the flow of Euro zone decay.
For Most People… ¦ For Most Reasons… ¦ For Most Currencies…
The continued weakness of the euro is a concern, with investors dumping the currency amid fears that debts
will cause defaults by weaker countries in the European Union. The single currency has fallen in value by
almost a fifth against the dollar in the last six months.
It is worth noting that Sterling is closely aligned with that of the single currency. Debt worries continue both
in the UK and Europe, Austerity measures have been announced by both and with 54% of UK exports
heading to Europe it is no wonder that the pound finds itself struggling against the Dollar whilst frequently
undergoing abrupt shifts and reversals against the Euro.
When reviewing the week’s data and fundamentals as mentioned, it continues to show the fragile state of
Sterling and the UK Economy.
Time will only tell but the continued economic weakness in both economies will halt the dramatic gains that
many had hoped for during the summer months and instead will be replaced by a volatile and uncertain
Pound vs. US Dollar
Last week saw a 2.4% variation in cable between the highs and the lows of the week. This is as speculators
raise their bets against sterling to record levels after the formation of the new coalition government and
worries escalate over the health of the country’s finances.
Data released by the Chicago Mercantile Exchange showed that these speculators had further increasing
their short positions in Sterling taking the ration of short-to-long positions to nine-to-one. Essentially for
every one prediction that Sterling was set to gain strength, there were nine positions stating the opposite.
This overwhelming negative opinion of the pound saw a 14-month low for the Sterling-Dollar currency
pairing at $1.4230.
Jeremy Stretch at Rabobank stated however, that “with the ratio of shorts to longs almost nine-to-one, the
scope for a snapback in sterling on any better news remains significant.”
On Tuesday we saw a host of data releases including figures for Q1 GDP as well as the Queen’s Speech at the
State Opening of Parliament where key policy announcements were made with respect to future spending
As the dollar performs well against a basket of currencies, sterling has been rather sensitive. Whilst data
showed that the British economy grew 0.3% this first quarter, the currency has still lost more than 11
percent against the dollar this year.
This sensitivity and thus possible volatility is likely to be tested further as Chancellor George Osborne
announced 6.25 billion pounds of public spending cuts in an effort to trim the budget deficit.
The dollar as well as the yen both gained ground this last week as nervous investors pondered the escalating
tensions in South and North Korea and the euro-zone sovereign debt crisis.
For Most People… ¦ For Most Reasons… ¦ For Most Currencies…
As the dollar experienced renewed safe haven status due to issues within the Korean Peninsula, the
euro fell below $1.22 as concerns over the European banking system after the recent bank bailouts in
Spain increased.
Whilst Britain’s fiscal deficit is running at some 11% of GDP, the new government has been setting out
measures to lower it and as a potential boost for sterling; the evidence that there are rising
inflationary pressures which some analysts think may prompt the Bank of England to raise interest
rates before the end of the year.
The remainder of the week saw a worse than expected annualised rate for Q1 GDP in the United
States and sterling was able to make some gains on that news coupled with a light data calendar that
left the market focusing on external factors, primarily movements in risk and equity markets.
During this week of ups and downs, we here at the Foremost Currency Group have been helping
clients secure the best possible rates for their currency purchases.
One of the tools at our disposal, the Stop Loss and Limit order, helps clients to optimise their
purchase. By talking to your account executive and knowing where to place a minimum and/or
maximum on your exchange rate it is possible to safeguard against any potential loss should the
market drop and ensure that you are able to take advantage of any upward spikes without having to
watch the currency markets.
For the week starting 31st May, the U.S. as well as the U.K. had bank holidays on Monday. This leaves
important U.S. data releases on Tuesday concerning manufacturing levels and Friday concerning both
Non-Farm Payrolls and unemployment rates.
See the relevant data releases below for a concise round-up of volatile market movers; however it is
well worth taking the time for a consultation with your Account Manager here at the Foremost
Currency Group. We keep abreast of economic data releases and opinion polls to allow us to deliver
sound market knowledge, helping maximise your Sterling/Dollar currency potential.

Europe's debt problems

Have borrowed most of the information below from the Associated Press, as it makes enlilghtening, if slightly scary reading.

2009 debt: 115.8 percent of gross domestic product
Deficit: 5.3 percent of GDP.
2010 growth estimate: 0.8 percent.
2011 estimate: 1.0 percent.
Unemployment: 8.6 percent.
Italy has piled up lots of debt but so far has been spared the troubles plaguing Greece. Bond markets are still willing to lend at affordable rates in the belief the country will make good on its debts.
Still, rising market pressures on other countries has forced Prime Minister Silvio Berlusconi's government to announce spending cuts to reassure bond investors the country's finances are under control.
That surprised Italians after they had been assured for months by Berlusconi and his aides that Italy would escape the government crisis without painful measures.
Berlusconi announced euro25 billion ($30 billion) in budget cuts for 2011-2012 to reduce the deficit to 2.7 percent of GDP by 2012. The cuts target the country's bloated bureaucracy and aim to recoup some of the estimated euro120 billion Italy loses to due widespread tax evasion.
While welcoming the measures, Italy's main industrial lobby Confindustria said they don't do enough to spur Italy's perennially sluggish growth.
2009 debt: 115.1 percent of GDP.
Deficit: 13.6 percent.
Deficit projection for 2010: 8.1 percent.
2010 growth estimate: minus 4.0 percent.
2011 estimate: minus 2.6.
Unemployment: 12.1 percent
Europe's problem child, Greece spent itself into trouble with a bloated public sector and widespread tax evasion, then lied about the shape of its finances. In October, a new government shocked markets by announcing the debt was 12.5 percent of GDP, more than four times the previous government's estimate. It has subsequently revised up to 13.6 percent.
Revelations that past governments had fudged statistics further undermined market confidence. As a result, bond markets hammered Greek debt and refused to lend to Greece at an affordable rate.
Prime Minister George Papandreous's government was forced to take a euro110 billion bailout from the eurozone countries and the International Monetary Fund to avoid defaulting in May. Many economists think Greece will eventually have to restructure its debts despite the bailout because of its weak economic growth.
Debt is projected to peak at 149.1 percent of GDP in 2013 before beginning to fall the following year. Greece faces the double challenge of massive debt, which stands at about 310 billion euros, and the harsh austerity measures imposed in order to release the eurozone-IMF rescue loans are expected to dampen consumer spending.
With no particular industrial output to speak of, Greece is a heavily consumer-based economy, so the recession will further hamper the government's efforts to pull itself out of its debt crisis. Tourism, one of its main industries, is already suffering after television images of Greeks rioting over austerity plans.
2009 debt: 96.7 percent of GDP
Deficit: 6 percent.
2010 growth estimate: 1.3 percent.
2011 estimate: 1.6 percent.
Unemployment rate in March: 8.1 percent.
Belgium's reliance on trade has hurt the economy in the last two years ago, but the recent recovery in European exports — many routed through the busy port of Antwerp — has helped the economy return to growth. However, the country's persistent budget deficits and uncertainty over political reforms that could transfer more power from the federal government to the regions mean that it may face problems curbing a debt mountain that will top 100 percent in 2011.
2009 debt: 78.1 percent of GDP.
Deficit: 7.5 percent of GDP.
2010 growth estimate: 1.4 percent.
2011 estimate: 2.5 percent.
Unemployment: 10.1 percent.
Five months after unveiling a euro 35 billion "Big Loan" aimed at spurring France's moribund economy to life, French President Nicolas Sarkozy announced this week that tackling 30 years of accumulated deficits is now a "national priority."
A three-year spending freeze, combined with a crackdown on tax loopholes and other measures are now promised as a way of bringing France's deficit under the 3 percent threshold enshrined in EU rules by 2013. Of cource, Sarkozy once promised to achieve that by this year, but that was before the crisis.
French government forecasts of 2.5 percent growth from 2011 onward are optimistic compared to estimate of only 1.7 percent growth from the Organization for Economic Cooperation and Development, a grouping of developed countries.
2009 debt: 76.6 percent of GDP
Deficit: 9.4 percent of GDP
2010 growth estimate: 0.5 percent
2011 estimate: 0.9. percent
Unemployment: 10.5. percent
Portugal's economy, burdened by low education levels and labor laws that make hiring and firing difficult, has been struggling to get traction since the turn of the century, with growth averaging less than 1 percent since 2000.
Traditional industries such as textiles and footwear have shrunk under global competition while tourism, which generates 10 percent of economic output and jobs, has slumped amid the global economic crisis.
The minority center-left Socialist government is trying to develop high-tech sectors such as renewable energy but as a small country of 10.6 million people Portugal is dependent on growth in its European trading partners for an export recovery. It is also trying to increase trade with developing nations, especially Angola, its former colony, and Portuguese-speaking Brazil.
The government predicts the national debt it will peak at 90.1 percent of GDP in 2012 before falling back.
2009 debt: 73.2 percent of GDP
Deficit: 3.1 percent of GDP
2010 growth estimate: 1.4 percent
2011 estimate: 1.6 percent
Unemployment: 8.1 percent
Germany, the eurozone's biggest economy, cut its budget deficit to zero in 2008 but then saw it return last year in the wake of the global financial crisis. The government says this year's deficit will be above 5 percent, but it has pledged to get back below 3 percent by 2013.
The constitution has a "debt brake" that forces the government to cut back borrowing over the coming years.
Germany's recovery has been heavily reliant on exports, and domestic demand has been a weak point for years. Chancellor Angela Merkel started her second term last October pledging tax relief to boost the economy but her new center-right government delivered only a modest package of measures.
Merkel pushed hard to make sure the European Union's bailout of Greece was accompanied by promises of harsh cutbacks, and some accused her of making the crisis worse by delaying. Bailing out Greece was unpopular at home, and Merkel's party suffered a state election defeat in May that deprived her government of a majority in the upper house of parliament.
Merkel declared that further tax cuts won't be possible until 2013 and the emphasis will now be on keeping debt under control. She hasn't yet detailed possible spending cuts but has indicated that education will be spared.
IRELAND: 2009 debt: 65 percent of GDP.
Deficit: 14.3 percent.
2010 growth estimate: minus 0.7 percent.
2011 estimate: 3.0 percent.
Unemployment: 12.6 percent.
Ireland enjoyed Europe's longest sustained growth from 1994 to 2007 amid unprecedented investment by foreign high-tech firms seeking a low-tax base in the European Union.
But the Celtic Tiger boom collapsed amid the global credit crisis, which exposed the country's reckless reliance on foreign lending and property speculation to fuel spending. In its annual budget in December, Ireland slashed pay for state workers, cut welfare benefits and imposed new environmental taxes on fuel as part of a record euro4 billion ($6 billion) in budget cuts to combat the runaway deficit.
It was rewarded for the budgetary constraints with far lower market borrowing costs than Greece. The Irish government said recently it is on track to cut its deficit to be in line with the European Union's limit of 3 percent of GDP by 2014.
2009/10 estimated debt as percentage of GDP: 62 percent.
Deficit: 10.4 percent.
2010 growth estimate: 1-1.5 percent.
2011 estimate: 3-3.5 percent.
Unemployment: 8 percent.
Public finances in Britain, which does not use the euro, have shown signs of slowing deterioration in recent months, but remain at record levels.
Britain does have some advantages over countries like Greece: it prints the currency in which its liabilities are denominated, so it can devalue and make its exports more competitive. It is considered a surer bet for repayment, maintaining a triple-A credit rating. Still, the new coalition government headed by Prime Minister David Cameron of the Conservative Party has made cutting debt its priority to get the country "back open for business."
Britain was hit particularly hard by the global credit crunch because of its huge financial sector, and the government carried out a multibillion pound bailout of major banks even as levels of personal debt soared among consumers. Like the US, it also faced a collapsed real estate bubble.
The European Union has warned that Britain's deficit is likely to hit 12 percent of GDP this year, four times what the bloc considers acceptable. Debt is expected to reach 88 percent in 2011 or 2012, overtaking the EU average.
2009 debt: 61 percent of GDP
Deficit: 3.4 percent of GDP
2010 growth estimate: 1.5 percent.
2011 estimate: 2.0 percent.
Unemployment: 5.9 percent.
The Netherlands went into the financial crisis with the best national finances it had seen in decades, and all main parties committed to pruning the welfare state — with different emphases. The country has a competitive, open economy, natural gas resources, and is a net exporter, especially of agricultural goods.
But its unusually large financial services sector led to an abrupt spike in national debt largely due to bailouts during the crisis.
Although the Dutch are in an anti-Europe mood and many would love to see the return of the guilder, policymakers recognize that but for its euro-membership, the Netherlands might well have wound up like Iceland and seen its currency and banking system collapse.
Dutch national elections are scheduled for June 9, and major battlegrounds include whether the retirement age should be raised to 67 from 65 and whether to scrap the tax deduction on mortgage interest. Anti-Islam politician Geert Wilders is trying to halt a big slide in the polls by arguing that non-Western immigrants cost the country euro7 billion per year.
SPAIN: 2009 debt: 55.2 percent of GDP
Deficit: 11.2 percent of GDP
2010 growth: minus 0.3 percent.
2011 estimate: 1.3 percent.
Unemployment: 20.05 percent.
Spain is grappling with the twin woes of a moribund economy and a lopsided deficit that is triggering fears of a Greek-style debt crisis. The government has cut spending to chip away at the deficit, but acknowledged that this will also chop half a percentage point off its forecast for growth in 2011, down to 1.3 percent. And there are doubts over whether that level of growth can generate net employment and ease the 20 percent jobless rate. Before the economic crisis, Spain relied heavily on free-flowing credit and a red-hot construction sector.
Now it is search of a new growth model and there are no obvious solutions. Business leaders and many economists say the government must reform the stodgy labor market to encourage employers to hire and restore a climate of confidence.