Eurozone finance ministers agreed to lift Europe’s firewall to be better prepared in the eventuality of a reawakening of the region’s financial turmoil. In an official statement they said “the current overall ceiling for the European Stability Mechanism (ESM) / European Financial Stability Fund (EFSF) lending… will be raised to 700 billion euros”.

The increase will be reached by parking the €200bn currently committed to Greek, Irish and Portuguese bailouts. The ministers also committed to accelerate capital payments into the ESM to guarantee it has enough lending firepower by July 2013.

In the UK manufacturing Purchasing Managers Index (PMI) came out stronger than expected in March, reaching 52.1 from 51.5 in February, above expectations of a decline to 51. Both domestic and foreign orders increased in March, indicating some momentum in UK manufacturing activity. On a negative note, price pressures intensified further in March in both input prices and factory gate prices, while labour market conditions remained challenging.

Meanwhile, US consumer spending showed more economic resilience by exceeding the consensus view in February to rise by 0.8% month on month versus a consensus of a 0.6% increase. This view was further strengthened with the January figures being revised up to 0.4% from 0.2% reported previously, suggesting that growth may not have slowed, as many had feared in the first quarter of 2012. Real consumer spending rose by 0.5% month on month, the largest gain since September 2011.

These numbers more than outweigh the less upbeat personal income report, which reported weaker-than-expected figures for February 2012 (0.2% versus consensus 0.4%), which represented a 0.1% fall in real disposable income in the US.

This article was compiled by Bank of Valletta for general information purposes only.