The biggest threat to near-term recovery in the Eurozone is not the periphery. It's France - which represents over a fifth of the area's GDP.
CNBC: - The figures showed the euro zone's second-largest economy, hit by lagging trade competitiveness and a caught in a shallow recession, will not be able to count on its traditional driver - consumer spending - to rebound.
The sickly growth will leave France's 2013 public deficit near 4 percent of economic output, overshooting an already revised target of 3.7 percent and further away from an EU goal of 3 percent, the state auditor said in a report on Thursday
French consumer confidence is now worse than the lows of the Great Recession.
In contrast, German consumer sentiment (as measured by GfK) jumped to a 5.5-year high in June.
GfK German Consumer Sentiment (Bloomberg)
Even Italy is showing improved consumer mood, which is now at a 15-month high. Assuming the banking system deleveraging slows (and many expect that it will), stabilization of economic conditions in France could set the stage for recovery in the Eurozone as a whole.
Source: Sober Look
