As previously discussed, the recovery looks real to me, firmly supported by very high public sector deficits, and the implied support of the ECB which continues to stand by to fund the banking system as well as to buy national govt debt in the secondary markets as needed.

Yes, there are downside risks from external shocks and from future fiscal consolidation, but there are also offsetting upside risks to forecasts as well.

EU Headlines:

European Loan Growth Accelerated in June as Economy Recovered

EU Tests Get Positive Response From Finance Firms, BofA Says

Basel Committee Agrees New Bank Capital Rules

Germany Refuses to Sign Parts of New Basel Accord, WSJ Says

Germany warned of ‘big challenges’ ahead

German consumer confidence up strongly

Spanish Debt Costs Fall in First Auction Since Stress Tests

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