Euro zone sentiment rises despite political uncertainty

But Irish businesses are feeling cautious...

Euro zone sentiment rises despite political uncertainty

Hans Punz / AP

Economic sentiment is on the up across the Euro zone, despite the uncertainty created by the UK's looming EU exit and Donald Trump's victory in the US presidential election.

New data from the European Commission shows that its economic sentiment index rose from 107.8 to 108.2 in January.

A poll of economists by Reuters had expected a fall in sentiment to 107.7.

Euro zone inflation has been gathering pace, led by Germany. A number of its regions have surpassed the ECB's target 2% inflation rate.

The Spanish and Dutch economies have also experienced stronger economic performance.

The ECB is set to continue to pump money into bond markets in an attempt to provide further stimulation.

However, the bloc faces a number of threats in the coming months - euro-skeptic parties are expected to make big gains in elections in the Netherlands, France, and Germany.

Meanwhile, the EU and IMF are still at loggerheads over the future of Greece's bailout - the prospect of a new fiscal crisis could derail the recovery.

Irish caution

This news comes after a new report this morning showed a slight feeling of caution has set in among Irish business leaders.

Bank of Ireland's Economic Pulse survey found that while two out of three companies plan to expand in the next three years, this is down from the three in four planning to do so in January 2016.