April 9, 2003

TWO SHIPS THAT PASS IN THE NIGHT:

Weak confidence may tip EU into recession (George Parker, April 8 2003, Financial Times)
Europe's growth forecasts for 2003 tumbled on Tuesday, with warnings that the continent could fall into recession if tensions over Iraq endure and consumers suddenly lose confidence.

The gloomy spring forecast by the European Commission cut baseline eurozone growth predictions from 1.8 per cent to 1 per cent. Italy risks joining Germany, France and Portugal in breaching the EU's budget rules.

Most of the bright spots in the report arise from countries outside the 12-member eurozone.

Gordon Brown, the British finance minister who presents his 2003 budget on Wednesday, will be pleased that the Commission believes the UK has weathered the downturn "rather well", albeit with a rising budget deficit.

The 10 EU candidate countries, mainly from the former communist bloc, also continue to outstrip the performance of the eurozone countries, with growth predicted to be 3.1 per cent this year and 4 per cent or more in 2004.

Pedro Solbes, EU economy commissioner, said Europe needed to pursue tough policies to "inspire confidence" at what he described as "a crucial juncture" in the EU's history.


Let's go out on a limb and assume that by "policies to 'inspire confidence'" Mr. Solbes does not mean increases in birthrates; reductions in regulation, government spending, and taxes; and reform of entitlement programs--so he's really not serious. Posted by Orrin Judd at April 9, 2003 8:06 AM
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