EU GDP Falls Sharply As Pressure On Euro Grows

Preliminary readings for Eurozone GDP over Q1 2020 have been confirmed at -3.8%, missing the -3.5% contraction anticipated and a sharp fall from the previous reading of 0.1%. Considering the numbers only incorporate a few weeks of the European lockdown, analysts are expecting a more severe contraction over the upcoming quarter.

This follows louder calls from the French President Emmanuel Macron last week, insisting that the European Unions Covid-19 rescue package should be worth at least 5 to 10% of EU gross domestic product. There is still disagreement of whether funds will be transferred in the form of loans or grants and has severely hampered the unions response for member countries hardest hit by the crisis.

Elsewhere, figures published by Eurostat showed that both the EU consumer price index and unemployment rates dropped less than expected in recent months – decreasing the likelihood of deflation around Europe.

The mixed figures may trigger some form of action from the European Central Bank who announce their latest policy decisions later today. Markets will be listening closely to comments from its current President, Christine Lagarde, who could hint that it is ready to change its QE programme or deposit rates sooner than expected.