A long way before Continent solves its structural problems

The European markets shrugged off the dual headwinds of the rising costs of oil and the weak dollar in 2005 to post strong gains. Fears of an increase in inflation stole the headlines in October leading to a sharp market correction. Moving into 2006, the price of oil, although high, appears to have stabilised, while the dollar has strengthened, which helps European industry compete. The core structural issue of expensive, inflexible labour continues to impact European competitiveness and helps explain the stubbornly high unemployment levels in continental Europe. Sadly, German electio...