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EZ leaders grapple with economy, Russia

Thursday, December 18, 2014 - 02:39

Ahead of the last summit of European leaders this year, German chancellor Angela Merkel warns there's no quick and simple fix to the euro zone crisis. The economy is top of a heavy agenda for the two-day meeting, as is the possibility of further sanctions against Russia. Joel Flynn reports.

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A little Christmas cheer here in Madrid - the mood among many optimistic going into 2015. This is an economy that's been a surprise winner of the last 12 months. Spain emerging last year from a deep recession to become one of the fastest growing countries in the euro zone. Domestic demand has helped, but an economic slowdown among its euro zone trading partners has dampened prospects. Germany has been one of the big worries. But the latest data from Ifo shows an upturn in business sentiment there - good news for Angela Merkel as she gave her State of the Union address. SOUNDBITE: German Chancellor, Angela Merkel, saying (German): "We have this crisis under control, but we have not overcome it definitively. It is as I have said time and again, there are no quick and simple solutions, there is also no decisive blow that would get rid of all these problems overnight and forever." David Cameron and other European leaders at a pre-summit meeting in Brussels. Talk here focussing on a transatlantic trade deal - but it's problems this side of the pond that are preoccupying. Consumer prices across the euro zone have been falling - oil prices adding to the growing spectre of deflation. Expectations are that the European Central Bank will step up stimulus to fight that off. Sovereign bond purchases among the measures likely in the New Year - though some opposed to it, including Germany's central bank. The backdrop for the latest leaders summit in Belgium, then, typically one of disagreement. ECB President Mario Draghi nearly out of weapons to fight off deflation - QE seen by some as a last resort. He's hoping for more fiscal stimulus from Europe's leaders. But's IG's Chris Beauchamp is sceptical. SOUNDBITE: IG Market Analyst, Chris Beauchamp, saying (English): "I think if this Euro Zone summit decided anything in particular it would be a marked departure from the norm for them, because a lot of fine talk but not much action to go with it, because of course that's very similar to what the ECB does at the moment. But I think the improvement in German figures over the last couple of months that we saw in that Ifo reading is based primarily on the idea that the ECB is going to take some sort of action in 2015 or at some point in the New Year, and that is going to be the main reassuring element." All this of course while Russia's economy remains high in the headlines. Protests in Moscow where Vladimir Putin blaming the West for a looming recession and a crumbling currency. EU sanctions for Russian involvement in Ukraine have contributed to his problems. French President Francois Hollande. SOUNDBITE: French President, Francois Hollande, saying (French): "If Russia acts as we expect then it won't be necessary to announce new sanctions. Rather it would be right to look at commitments to de-escalation. Everyone's interest - Ukraine, Russia and Europe - is for solutions to be found quickly." Some signs of progress in Europe then, but 2015 still likely to be a difficult year for leaders and their countries.

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EZ leaders grapple with economy, Russia

Thursday, December 18, 2014 - 02:39