Italy needs radical reform to cut its unit labor costs and regain competitiveness, but that can be a very painful process.

All available indicators of retail activity are moving in the direction of improving household spending.

What we have seen over time is a gradual pickup in underlying growth momentum. The strength we were seeing earlier in the year in the export side has started to spill over to investment.

There is a risk (to the recovery from the VAT hike) but since we are seeing stronger growth then there is a bigger chance that the German economy can actually withstand it.