Posts Tagged ‘Slovenia’


House prices might be rising in the UK, but that is not what’s happening across most of Europe.

According to new data from the EU Commission, house prices across the Eurozone fell 2.2 per cent year on year in the first quarter of this year. Across the EU they fell 1.4 per cent.

Among the Member States for which data are available, the highest annual increases in house prices in the first quarter of 2013 were recorded in Estonia (+7.7 per cent), Latvia (+7.2 per cent), Luxembourg (+4.3 per cent), and Sweden (+4.1 per cent), and the largest falls were seen in Spain (-12.8 per cent), Hungary (-9.3 per cent), Portugal (-7.3 per cent), and the Netherlands (-7.2 per cent).

In France they were down 1.4 per cent. They fell 5.7 per cent in Italy, 3.0 per cent in Ireland, and 0.4 per cent in Cyprus.

The latest data for Germany is not yet available, but in Q2 2012 they rose 2.3 per cent, year on year.

According to recent OECD data, when comparing average house prices to rent, they are 71 per cent above the historic average in Norway, 64 per cent more than average in Canada, 63 per cent more in Belgium, 61 per cent in New Zealand, 38 per cent in Finland, 37 per cent in Australia, 35 per cent in France, 32 per cent in Sweden, and 31 per cent in the UK.

Prices to rent are below the historic average in the US, Japan, Germany, Italy, Czech Republic, Greece, Ireland, Iceland, Portugal, Slovak Republic, Slovenia and Switzerland. In the case of Japan, Germany, Greece, Ireland, Portugal and Slovenia they are less than 80 per cent of the average relative to rents.

© Investment & Business News 2013


“The lady doth protest too much, methinks,” said the Queen Gertrude to Hamlet. Maybe Uros Cufer, Slovenian finance minister, said something similar. He said “We do not have to go to the markets in these overheated times due to Cyprus…We can wait for the markets to calm down, for the investors to feel comfortable about our action and then we will tap the market.” Pressing home his point he also said: “We will need no bail-out this year….I am calm.” And just in case you are still in doubt he also said: “Slovenia cannot be compared to Cyprus. It is certainly not a tax haven… the basic problem of the banks in Slovenia is too much debt in companies and a lack of capital.”

Hamlet had tricked Queen Gertrude. He suspected she and his stepfather had colluded to murder Hamlet’s father. He staged a play to see how she would react to scene in which a woman promises her husband that if he died she would never remarry. Hamlet asked his mother what she thought of the play so far and she replied: “The lady doth protest too much, methinks.” In Elizabethan times the phrase actually meant: “I think the lady is promising too much.”

English lesson over. It matters not. Does Mr Cufer protest or promise too much? It boils down to much the same thing. The markets are fretful; they think Slovenia may be next. Whether next means next to the gallows, to the IMF, or to something else, is not clear.

In one sense though, Slovenia most certainly isn’t Cyprus, or Portugal, Greece, Spain, Italy or even France.

Slovenia’s gross government debt at the end of 2012 was around 52 per cent of GDP. Only three Eurozone countries had less debt. Its unemployment level in February was 9.7 per cent; that is high, but then again it is below the Eurozone average. Slovenia is different in one other way. It is exporting more than it is importing, and is expected to enjoy a current account surplus worth around 3 per cent of GDP this year. Across the euro area, only The Netherlands, Luxembourg and Germany are expected to see a better performance than that.

Slovenia’s problem is that its government debt is rising – the fiscal deficit has been around 5 per cent of GDP every year since 2009, and is forecast to fall only very slowly. Bank liabilities are more than 100 per cent of GDP (much less than Cyprus but still very high) and bank lending to households and business is around 85 per cent of GDP. The country is stuck in recession, and is likely to stay there this year.

Now some might look at those fundamentals and say Slovenia is a bit like the UK, only thanks to its trade surplus in some ways it is better off. It is just that the markets see the UK as a safe haven, and the government can borrow money so cheaply it is a wonder it doesn’t do so more often. In Slovenia bond yields are approaching levels that in the past and in other countries precipitated asking the IMF for help.

The markets are demanding austerity when what Slovenia needs is more demand. And that is why Mr Cufer may indeed be promising and protesting far too much.

©2013 Investment and Business News.

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