THE European Central Bank (ECB) has shocked markets by today taking no action to prop up the eurozone, despite warning signs the economy is struggling to cope with Britain’s vote to leave the European Union (EU).
Stock markets in Europe were in the red after the ECB unexpectedly left policy unchanged amid the worrying outlook for the eurozone.
A flurry of dire data in the weeks after the Brexit vote has pointed towards a sharp slowdown for the bloc, prompting expectations the central bank would take decisive action.
Investors’ disappointment was evident with a 1.2 per cent plunge in Germany’s top stock market the DAX and 1.1 per cent fall in France’s equivalent the CAC.
Chief of the central bank Mario Draghi revised economic forecasts for Europe down in 2017 and 2018, as Brexit takes its toll on the bloc.
The central bank has already slashed interest rates into negative territory and are currently injecting a whopping €1.7 trillion worth of cash into the economy.
Yet, jobless figures last week showed unemployment in the eurozone is still at a hefty 10.1 per cent, while inflation is still very low.
The eurozone’s largest economy Germany appears to be particularly hard hit by the Brexit vote, as its service sector plunged to its lowest level in more than three years last month.
Confidence in the German economy during August also dived at the fastest rate since the height of the eurozone debt crisis in 2012, as measured by the economic institute Ifo survey.
Full article: Europe’s stock markets PLUNGE amid fears ECB has run out of tools to save eurozone (Express)