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Europe's economy: mixed messages

France and Germany are up. Portugal? Not so much.
Portugal austerity bailout 2011 3 23Enlarge
Portugal's Prime Minister Jose Socrates (L) arrives at the parliament in Lisbon on March 23, 2011. (Francisco Leong/AFP/Getty Images)

Germany's economy — the largest in Europe — is showing signs of strength.

Sort of.

Unemployment fell by a seasonally adjusted 55,000 in March. Meanwhile, Germany's jobless rate slid to 7.1 percent from 7.3 percent in February. That's the lowest rate since Germany's 1990 reunification.

Thought not everything is schnitzelriffic in Germany: retail sales fell by 0.3 percent in February, following a gain of 0.4 percent in January.

Carsten Brzeski of ING in Brussels told the New York Times that the most recent figures “again illustrated the German economy’s main dilemma: While the labor market remains the showcase of the recovery, private consumption is still sluggish.”

France — Europe's number two economy — reported some hopeful news today.

The country's 2010 budget deficit fell to 7 percent of gross domestic product (it had been at 7.5 percent). That's even better than what the government was first forecasting.

And Portugal? It's headed the other direction.

The country's budget deficit rose to 8.6 percent of GDP. That's more than a few balcalhau dishes above the government's target of 7.3 percent.

Lisbon blames the performance on a change in accounting rules.

But, as Paul Ames reported last week in GlobalPost, Portugal is in rather dire economic and political straits. Prime Minister Jose Socrates resigned Mar. 23 after the country's parliament rejected his latest austerity measures.

What was the Socratic method for addressing Portugal's worsening debt crisis?

Going it alone:

“Appealing for outside help would have deeply negative consequences, above all for the image, the prestige and the rating of our nation,” Socrates said in his resignation speech. “There is a big difference between a country that solves its own problems and a country that has to appeal for foreign help.”

On Tuesday, Standard & Poor's lowered its debt rating on Portugal for the second time in less than a week.

http://www.globalpost.com/dispatches/globalpost-blogs/macro/europe-economy-germany-france