IF ONE GOES, WE ALL GO

Heart of eurozone skips a beat as Germany slips into recession (Larry Elliott, May 16, 2003, The Guardian)

Gerhard Schroeder's embattled government was plunged into fresh crisis yesterday when a second quarter of falling output pushed Europe's powerhouse economy into recession and caused growth to grind to a halt across the 12-nation eurozone.

The Netherlands joined its larger neighbour in suffering two consecutive periods of retrenchment, with falling output in Italy in the first three months of 2003 piling additional pressure on the European Central Bank to boost growth through an emergency cut in interest rates. [...]

Economists said Germany would barely grow at all in 2003 after its economy contracted by 0.2% in the first quarter. Meanwhile, Italy's GDP fell by 0.1% and that of the Netherlands by 0.3%.

Martin Essex, an analyst at Capital Economics, said: "As GDP contracted in the final quarter of last year in Germany and the Netherlands, both are technically in recession. Moreover, no end to Germany's woes is in sight. Interest rates remain too high, the stability pact restricts the government's ability to loosen fiscal policy, the chancellor is too weak to tackle structural problems and the euro's strength has worsened conditions for the external sector at a time of slack domestic demand."

Yet Britain's Europhiles want Tony Blair to yoke the nation to this dying team? Posted by Orrin Judd at May 15, 2003 11:58 PM