The outlook for 2012 and 2013 depends, for instance, on developments in international economic activity and on the result of the coming wage bargaining rounds in the labour market. The financial markets during the summer Developments in the financial markets have been dramatic over the summer. Share prices, government bond yields and exchange rates have fluctuated substantially. This turbulence is one factor that could have significance for future forecasts. This is essentially due to renewed concern over sovereign debt problems in the euro area and the United States. Focus has primarily been on four issues: public finances in Greece, the risk of problems spreading to Spain and Italy, potential problems in the European banks and the management of the debt ceiling and public finances in the United States. New support package for Greece At the beginning of the summer there was particular concern over developments in Greece. After a series of meetings of various policy-making bodies within the EU as well as a vote of confidence and a decision on budget-strengthening measures, structural reforms and the sale of state-owned companies in the Greek parliament it was decided in mid-July that Greece would receive a further support package from the euro area and the IMF. This led to a slight fall in the yield on Greek government bonds from their extremely high levels (see Figure 11).
Spain and Italy in the danger zone At the beginning of August concern increased that the problems would spread to other countries than Greece, Portugal and Ireland, who were already receiving support. Market participants focussed on the sovereign debt situation in Spain and Italy, which caused government bond yields to rise in these countries. Both countries have problems with their public finances, but in different ways. Italy has a very large national debt, but not such a large deficit in public finances, while Spain has a smaller national debt but larger public finances deficit. Both countries have suffered declining competitiveness over the past ten years. Recently, the lack of confidence has also begun to affect France. The banks managed the stress tests There is also concern that the sovereign debt problems will spread to the banking sector. On 15 July the European Banking Authority, EBA, reported the results of the stress tests of 91 European banks, which together account for 65 per cent of the EU’s banking sector. This showed that all the banks but 8 had sufficient resilience to manage a deterioration in the  4  BIS central bankers’ speeches  scenario for the period 2011–2012, but that a further 16 banks almost did not pass the tests. However, all four major Swedish banks passed the stress tests with flying colours. The results were received with some scepticism, as they were not considered to be sufficiently credible, but the markets nevertheless calmed down.