26 OCT 2010
Blistering growth in Germany is aggravating the growing gap between the eurozone's North and South and may force the European Central Bank to tighten monetary policy long before the high-debt states are ready, Standard & Poor's has warned.
By Ambrose Evans-Pritchard | Telegraph
A separate report by Simon Ward from Henderson Global Investors said eurozone indicators are showing "unprecedented divergence", with the M1 money supply booming at double-digit rates in Germany but contracting in Spain, Ireland, and Greece.
S&P said Germany has been able to lever recovery off the emerging market boom, leaving Southern Europe behind. German exports – mostly machines and cars – account for 47pc of all EU goods shipped to China. France is a distant second at 10pc.
"Germany is recovering brilliantly," said S&P's Jean-Michel Six. "Its products are not price-sensitive to the exchange rate. It is entering a virtuous circle where exports lead to capital spending, leading in turn to consumption after years of quasi death."
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