Eurozone Crisis Live Blog: Cracks In The Plan Start To Show

Eurozone Crisis Live Blog: Cracks In The Plan Start To Show

The main headlines in the UK on Thursday morning suggest that Britain is looking to continue with its blocking strategy on EU reform by reaching out to countries that could join it on the outside of the treaty signed on 9 December.

While the details of the discussions have not been confirmed, analysts are reading it as signs that the cracks in the plans are beginning to show. In Ireland, the finance minister Michael Noonan warned that, if the new treaty required constitutional change then the deal might have to be put to a referendum.

Economic figures have been looking bleak. The eurozone is likely to enter a recession in the first half of 2012, according to a forecast from Ernst & Young. Volatility in markets is likely to keep growth in check until the December 9 plan comes into force over the summer - if it does, the company said.

Ernst & Young forecasts that the eurozone will grow just 0.1% on balance across the whole of 2012, rising to between 1.5% and 2% in 2013-15.

Marie Dimon, senior economic adviser to the forecast, said in a statement accompanying the report: “The reforms agreed at the summit on 9 December were a step in the right direction and the response seems to have been mildly positive.

"Yet investors remain very concerned about the commitment and ability of Eurozone governments to implement reforms quickly. Although this slow down is not currently comparable to the one experienced in 2008 there are still major worries regarding bank liquidity issues and unemployment for 2012.”

Fitch Ratings has taken a similar approach, after downgrading five more European banks in anticipation of "stronger headwinds".

Major European markets opened strongly across the board, but how long that lasts remains to be seen.

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