Britain the Economic 'Sick Man of Europe'
Sean O'Grady, The Independent (London, England)
Eurozone out of recession, led by Germany, but growth is below expectations Even Spain, poleaxed by a property slump, is doing better than Britain
After decades of outperforming the continental economies, Britain seems set to become the "sick man of Europe", languishing at the bottom of the European growth league table.
Official figures released by Eurostat yesterday revealed that the eurozone economies, comprising 16 of the EU's 27 member states, are now officially out of recession, having grown by 0.4 per cent in the third quarter. The growth rate for the EU as a whole, dragged down by the UK and some east European states, was 0.2 per cent. Both are the first positive news on growth since spring last year, though they are somewhat below market expectations.
Of the five largest European economies, only Britain and Spain are still in recession, and even the stricken Spanish economy is performing marginally better than the UK. The US and Japan are also out of recession.
Meanwhile, the German economy has staged a remarkable comeback from the depths it suffered as world trade and her manufactured exports fell off a cliff earlier in the year. Now Europe's largest economy is pulling the rest of the continent into an upswing, as exports revive and German industry begins to rebuild stocks and investment. Exceptional fiscal stimulus measures, such as a generous car scrappage scheme and job subsidies, seem also to have succeeded.
A spokesperson for Joaqun Almunia, the European commissioner for economic affairs, said the figures were "broadly in line" with Commission forecasts and that the Commission expected growth to stay positive to 2011.
While growth in the UK's major trading partners is good news, the danger now is that the Berlin government and the European Central Bank take the latest figures as justification for a withdrawal of monetary and fiscal stimulus measures before growth in laggard nations such as the UK has even begun. The G20 Communique agreed that such "exit strategies" should not be implemented before the global recovery had been "secured". …