Over the weekend officials in Athens announced the deficit for 2011 was forecast to be 8.5% of GDP rather than the 7.6% demanded by the troika of the ECB, EU and IMF.
Unsurprisingly, markets suffered a renewed bout of nerves as the ramifications of a supra-European refusal to bail out Greece hit home.
But despite the headwinds faced by Europe over the past year, investment companies focused on the area have seen the highest annual dividend growth over the last five years, according to figures released by the Association of Investment Companies (AIC).
The AIC said investment trusts in the European sector had seen average dividend growth of 20.5% per year in the five years to 31 August.
It pointed out dividend growth should not be confused with the highest dividends and admitted some of the annual dividend growth had started from a low base.
Nevertheless, it is interesting to note that while governmental finances in Europe have been up a muddy creek without a paddle, businesses have been steadily repairing and improving their balance sheets.
Of course this is what we have been hearing from all fronts throughout this latest period of market uncertainty.
The only problem is, the longer the European debt crisis rumbles on the more damage it does to investors’ confidence in the region and the less likely they are to hear or pay heed to even the most rational and fact-based assurances.
Another factor to consider is how long company fortunes can remain divorced from the countries’ they are domiciled in?
Surely even in a globalised world, something has to be said for having a strong and sound economy behind you.
Stephen Macklow-Smith, manager of the JPMorgan European Investment Trust, said: “The fact that Europe has seen the fastest dividend growth shows that the volatility caused by the eurozone crisis is masking the truth that European companies are in an excellent globally competitive position with strong balance sheets.
“They are currently trading at attractive valuations and with the euro trading at highly competitive exchange rates these companies are benefiting. We expect to see news around European dividends remain positive.”
Last month when I spoke to George Godber, fund manager at Matterly Asset Management he said dividends were starting from a very low base and the outlook for them increasing further was positive.
Fabien Dagan, fund manager for dividend strategies at DWS investments was also bullish on prospects for dividend yields.
Perhaps it is my natural Scottish sensibility – others might call it pessimism – but in spite of all the evidence to the contrary, I’m not quite ready to step on the dividend gravy train.
Ulitmately the confidence of investors and consumers is what keeps businesses strong: with no demand, we don’t need their supply.
So if the crisis limps on to the end of the year and people truly start to batten down the hatches, companies and investment trusts can carry on pointing to their built-up balance sheets, because they’ll need them.