The disastrous labor market figures from the UK this morning and sentiment indicators from Germany, which have just collapsed and point to a deep economic recession, bode ill for monetary policy on the old continent (both the ECB and the BoE).

So-called economists expect the European Central Bank to cut interest rates in six orderly steps over the coming quarters. These so-called economists are still assuming that the European economy is merely in a consolidation phase and not already stuck in a recession. These Keynesians do not understand that artificial demand programs by the state do not generate growth, but merely crowd out the private sector further and ultimately cost productivity growth, which can be quickly demonstrated by the data situation in the eurozone.

No, the ECB will soon be lowering interest rates in large steps in a panic in order to save what can no longer be saved. The eurozone is a dysfunctional currency area, which we have already discussed several times here, and cannot grow sufficiently on its own to keep the growing national debt under control, for example. With the expected easing of monetary policy in the eurozone, the common currency is facing a massive devaluation spiral, as Europe is dependent on energy imports, which will soon continue to rise in price relatively due to the rising pricing power of the BRICS countries. Dark clouds are gathering for consumers and households in the eurozone.

(graphic by Bloomberg)