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Saxo Bank's Q2 Outlook: Continued Low Growth Will End Politicians' Free-Ride

HELLERUP, Denmark, April 10, 2013 /PRNewswire/ --

Three months into 2013 and growth projections are already being lowered across the globe according to Saxo Bank, the multi-asset trading and investment specialist. The Bank writes in its Insights Q2 that the world is looking at a 2013 that is, from the outside, a mirror image of 2011 and 2012 but with a difference: The German election in September.

Low growth rates will increase the social and political tensions in Europe as seen by the recent bail-in/bail-out of Cyprus, in which everyone lost: the depositors, the Troika's credibility and any hope that the Eurozone has a real plan for dealing with this crisis in anything other than piecemeal fashion. The political consensus to buy time is running out as the policy makers increasingly will have to deal with intolerably high and rising unemployment and the lack of growth or reforms that will move economies forward.

The Insights Q2 features a comparison between the major Eurozone economies, the UK and the US, which reveals that the US ranked third behind Spain and Italy when it comes to reducing public sector spending last year. Meanwhile, the UK, France and Germany all saw increased public consumption - in that order.

Despite the decline in public spending, the Bank expects moderate growth to continue in the US in 2013 to the tune of 2%, down from 2.1% last year, before accelerating to 3% in 2014. The US economy may not be exactly stellar, but at least moderate growth is on tap. The outlook is decidedly more downbeat across the Atlantic, where the Eurozone must resign itself to the fact that the recession is destined to continue.

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