Jay Mawji of Vantage FX (http://www.vantagefx.co.uk/) takes a look at news around the Eurozone on 31st January 2012 – including new figures showing the UK economy shrank by 0.2% in the last third of 2011.

“Europe took a massive leap forward towards a fiscal-union today as a Merkel-inspired moment led to 25 of the 27 Eurozone countries signing up to ‘sanctions’ on their deficit.

As of March, Eurozone countries will now have to observe budgetary deficit targets and respect pre-agreed debt levels which will become national law. This agreement plays a vital role in the bailing out of the European Union. As Greece continues to struggle to make a deal with private investors, the rest of the European Union is pushing ahead with other plans to ensure that the Eurozone doesn’t fall flat in the coming weeks. According to Eurozone officials, a deal with Greece is merely hours away. The Eurozone have made statements such as these before, which have resulted in virtually nothing and it wouldn’t surprise markets if there is an announcement along the lines of “Greece and private investors have decided to agree something, but not until we have had a few more meetings.” The ECB is certainly excited at the realising of a Fiscal Union, which will now have the European houses in order. There is up to €1trn of bailout funds waiting for the Eurozone countries to sort out their affairs…

Two countries have opted out of the fiscal union treaty. We all knew David Cameron would play no part in such agreements, citing the independence of the British and the importance of protecting their own economy. He is joined by the Czech Republic, who aren’t too keen on the Eurozone. It’s no surprise considering that France has halved its growth forecast, credit ratings have been slashed across the Eurozone, Portugal is raising its hand asking for a second bailout and long term bonds in Germany and Portugal have reached record highs…all in the past couple of days.

If you were a Eurozone leader, would you stay or would you go?”

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