Euro plunges to 22-month low

Updated: 
Dire business news from the eurozone has forced the euro to its lowest value for almost two years. Eurozone PMI - manufacturing and services data - slumped to just below 46 points, its lowest level since the summer of 2009.

Worryingly, German manufacturing data is also looking weaker, plus German wages are now starting to climb. About time?


Euro bombs

The German composite PMI reading slipped to 49.6 from 50.5 in April, a six month low. A reading below 50 signals a contraction - so it's worrying news. Although the German services PMI remained at 52.2 for May, its manufacturing PMI figure sank to 45, close to a three-year low.

Germany has been Europe's only economy that has grown at all recently. Much of this has been about pinning down wages to help its exporters stay competitive. Wages though are starting to creep up - its chemical industry union has just agreed a 4.5% wage hike, a rate well above inflation - making Germany less competitive.

Holiday hope

Meanwhile in Spain, confidence has been rattled again this morning with Bankia, Spain's part-nationalised bank, on the verge of asking for a £12bn hand-out (its shares have already been suspended). So expect plenty more euro volatility.

The next big crucial European date will be the middle of June - when the next Greek election is set.

But the euro volatility is good news for Brit holidaymakers. This time last year £1,000 bought you around €1115. Currently £1,000 buys you around €1,244. If you're going to Greece, perhaps consider taking lots of cash - just in case.

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