In the EMU, construction activity output also tended downwards in June (see figure 1). The brief revival that we witnessed at the turn of the year is completely gone. In total, the output of construction is approximately 10 percent below the level of 2010. The situation is especially bad in France, where construction is 15% lower than the level of 2010. Germany is performing better, but there can be no question of a revival: the increased activity from the first months of the year is over.

Figure 1.

In southern Europe, including Italy, there is also no change (see figure 2). Italy and Portugal remain on the same low level that they had already achieved in 2014. Spain is still moving upwards but it is very slow and it remains more than forty percent below the level of of 2009.

Figure 2.

It becomes clear how disastrous the situation is when one looks at the construction output in some of the major central and eastern European countries (see figure 3). Instead of a catching up, Hungary and Poland crashed dramatically and the Czech Republic and Bulgaria are now also experiencing a deep slump.

Figure 3.

Retail sales in Europe have long been for several years the only indicator which points upwards (see figure 4). There has been an upward movement since 2013. The upward is being carried by France, while Germany, after a brief spurt in the last year, is weakening again. Italy remains with an index level of 95 at a level of retail sales which is 5% below the level of 2010.

Figure 4.

Spain, Portugal and Greece are also still clearly below the levels of 2010. Today, retail in Greece is 30% below the level of 2010 (see figure 5).

Figure 5.

In the face of this devastating economic development, unemployment in the euro zone remains on a disastrous high level of over ten percent (and this is the official figure). Since the middle of last year, Italy and France made practically no progress in reducing the number of unemployed (see figure 6).

Figure 6.

The price evolution shows that the euro zone remains in deflation (see figures 7 and 8). In the core countries, prices show no clear trend and remain close to the zero line. Producer prices recently declined slightly less, but they remain at minus three percent compared to last year.

Figure 7.

Figure 8.

Economic policy implications.

The economic policy conclusions to be drawn are obvious. Europe must take action to overcome permanent stagnation. Comparing Europe to the US since 2005 (see figures 9 and 10) makes clear that the weak recovery in the US was immeasurably much stronger than what many still incredibly refer to as a “boom” in Europe.

Figure 9.

Figure 10.

Contrary to the USA, according to official GDP figures, Europe has by now just managed to reach the level of 2008. Today, due to a pragmatic economic policy, the United States find themselves more than ten percent above the level of 2008. The two last figures also indicate how problematic the official calculations of GDP are in Europe. We commented on this already in the first part of the report. In all previous cycles in Europe – and in the US as well – industrial production grew stronger than GDP from the beginning of the recovery.  This seems to have changed in Europe after 2013, when GDP grew exactly as much as the industrial production.

The European statisticians have to explain which factors are responsible for the actual GDP growth that they document. The push does not come from industrial production because after 2013 industrial production began to stagnate. This is not only about Germany. Since the second half of 2015, Spain also reported regular growth in the latest quarters over the previous quarter by 0.8 percent and by 0.7% over the second previous quarter. None of the main indicators justify such a growth rate. Nobody asks where these numbers come from.

We already doubted the veracity of these statistics in 2015 (see here). After the financial crisis, Spain’s GDP decline stayed far below the Greek numbers, although the measured indicators and the rise of unemployment indicated an approximately equal decrease. But this was of no interest to the public or to the politicians. One accepts the figures of the statistical offices without asking any questions as long as the data fit the political acceptable story.

Europe lost another three years talking about a recovery which is reality never existed.  Nothing happened, aside from the unsuccessful attempts to stimulate the economy by monetary policies. This is fatal. The extremely high unemployment rates push people into hopelessness and frustration. These are, in turn, the breeding grounds for radicalism and anti-democratic movements. Evidently, re-employing people after a long period of unemployment becomes gradually more difficult.

At its core, it is German-Dutch mercantilism which is responsible, together with the economic governance of austerity. The media continue to completely stifle every attempt to discuss the obvious insanity. Even the ECB, which unsuccessfully tries to address the malaise, is being criticised more and more by the austerity fanatics. But when the ranks of those austerity mongers close more tightly, the more open and louder the criticism in the rest of the world becomes. It is more than time.