Has Europe got much to swagger about? – CNBC

6 months ago Comments Off on Has Europe got much to swagger about? – CNBC

A lack of funding for small and medium-sized businesses has been largely blamed for the region’s slow return to growth, which has been sluggish at best. The latest data in February showed that the euro zone economy grew 0.3 percent in the last three months of 2015, from the previous quarter.

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Borg agreed that Europe’s banking sector remained “weak” and said efforts to strengthen the region’s financial system with a banking union, which means more supervision and regulations for banks, put more pressure on the sector.

“It hasn’t been properly recapitalized, particularly in southern Europe, the countries are weak so they can’t do it. Banking union is a burden for them with tighter supervision and increasing demands. I don’t think we should think about the banking sector as the one which is providing energy and growth to the economy, particularly not in southern Europe.”

He said the European Central Bank was “doing the right thing” in terms of providing liquidity to the region in the form of its trillion-euro quantitative easing program but that in the long-run, the banks would need to be recapitalized “and that will be very difficult.”

“So I don’t think we should expect growth in southern Europe to be particularly vibrant. We can be happy if it’s sideways and stable.”

Has Europe got much to swagger about? – CNBC