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European exporters see boost from weak euro

/ Source: The Associated Press

European companies are happy with a weaker euro as it will help them boost exports this year, Europe's business federation said Monday.

The single currency used by 16 countries has taken a hit recently, falling to nine-month lows against the dollar, on worries about the public finances of countries such as Greece, Portugal and Spain.

While that shows a lack of confidence in the region's economic outlook, it does help exporters become more competitive.

Philippe de Buck, the head of BusinessEurope, told reporters Monday that "as we are export-oriented, a lower euro helps."

Exports are expected to be the main driver for "fragile" European economic growth this year as the lower euro makes European exports cheaper and global trade picks up after a sharp downturn in 2009, BusinessEurope said.

The federation, which represent 20 million European companies, said the volatility of exchange rates is more of a problem than the value of the euro.

The group forecasts that the European Union economy will grow by 1.2 percent this year, better than the 0.7 percent they predicted in September.

This could foreshadow an upgrade of the European Commission's November forecast of 1 percent growth this year. It will publish new figures on Feb. 23.

BusinessEurope says some 6.6 million jobs will be lost across the 27-nation bloc over 2009 and 2010 — and that governments need to reform labor markets to create more jobs as economic stimulus measures are withdrawn.

EU nations have long resisted reforms recommended by economists that would make it easier for employers to hire and fire workers — but undermine job security for people on long-term contracts.

EU President Herman Van Rompuy has warned EU leaders that they need to take tougher action to speed up the economy because Europe faces several years of sluggish growth that could affect the region's ability to pay generous health and social welfare benefits.