Europe’s economy is in a bad way. Policymakers need to react
Wage growth now appears to be fizzling out
![A cyclist in Berlin.](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20231216_FNP002.jpg)
European stocks and bonds have had a lot to deal with in recent years, not least war, an energy crisis and surging inflation. Now things are looking up. Germany’s DAX index of shares has added 14% since the start of November. Yields on French ten-year government bonds have dropped from 3.5% in October to 2.6%. Even Italian yields have fallen below 4%, from 5% in mid-October. Investors are upbeat in part because inflation is falling faster than expected. Yet their mood also reflects a grimmer reality: the economy is so weak that surely interest-rate cuts are not far away.
This article appeared in the Finance & economics section of the print edition under the headline “Euro moans”
Finance & economics December 16th 2023
- How to sneak billions of dollars out of China
- Is China understating its own export success?
- The mystery of Britain’s dirt-cheap stockmarket
- Vladimir Putin is running Russia’s economy dangerously hot
- Why stockpickers should get out more
- Europe’s economy is in a bad way. Policymakers need to react
- How to put boosters under India’s economy
More from Finance & economics
![Solar panels installed on the roof of a building at Skardu in Pakistan's Gilgit-Baltistan region.](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20250215_FNP002.jpg)
Cheap solar power is sending electrical grids into a death spiral
Pakistan and South Africa provide a warning for other countries
![People walk at Zaryadye park with the Kremlin and St. Basil's Cathedral in the background in Moscow, Russia.](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20250215_FNP502.jpg)
Russian inflation is too high. Does that matter?
In a strong economy, price pressure can endure for a long time
![illustration of a house cut in half diagonally, the lower corner being a bill.](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20250215_FND001.jpg)
Why you should repay your mortgage early
For the first time in decades, the arithmetic suggests settling housing loans
How AI will divide the best from the rest
Optimists hope the technology will be a great equaliser. Instead, it looks likely to widen social divides
The danger of relying on OpenAI’s Deep Research
Economists are in raptures, but they should be careful
Elon Musk is failing to cut American spending
DOGE has so far disrupted everything in government bar the deficit