Jens Lehmann Bust my Bubble.

The German economy is starting to see the stirrings of recovery. The IFO German business confidence survey reached a fifteen year high in March. The rise in business confidence is reflected in the rate of German inflation at 2.3% for April, in excess of the 2.00% most commentators expected. In France business confidence has also risen, an index measuring sentiment among French manufacturers increased to 108 in April, the highest since March 2001, acording to Paris- based statistics office Insee. (The German and French economies account for about half of the $9.4 trillion Euro Area economy.)

So it’s springtime for France and Germany, and for the supply of Euros, as the ECB announced currency in circulation grew at an annual rate of 13.6 per cent in February. How is the ECB viewing this?,

Well M. Trichet’s was heard to remark yesterday;

‘we have to remain credible with whatever risks we have to cope with’

`it's obvious that there are risks to price stability in the euro region,''

ECB council member Axel Weber said in an interview yesterday in the Frankfurter Allgemeine Zeitung. Inflation risks such as oil prices and money-supply growth

``make a normalization of the benchmark interest rate level seem to be in order.''

‘We have to remain credible’, ‘normalization of the benchmark interest rate level’ Translated into pounds shillings and pence; ‘we will increase the cost of borrowing’ The current Euro base rate is 2.5%, commentators now expect that rates will increase twice more to 3.25% by the end of the year. However the tempo and level to which rates will rise depends on a number of factors, including the inflationary impact of oil price rises and improving consumer sentiment in Germany.

That’s where Jens Lehman comes in, if he repeats the heroics of last night, (saving a penalty in the last minutes of the European Cup semi’s) in the World cup final against say Brazil. Well the ‘over the moon’ German zeitgeist, might send consumer confidence soaring.