Byline: STEWART FLEMING
THE HORDES of bargain-hunters flocking through Galeries Lafayette on Paris's chic Boulevard Haussmann tells the story. Not just in France but across Europe, the era of economic stagnation and double-digit unemployment in Euroland is a fading memory. Consumers are in buoyant mood, their confidence in the future is high.
So, as the American economy slows, initial fears that growth in Europe might also falter are fading.
Rising employment, generous tax cuts, flashing credit cards and vigorous capital investment spending suggest that Euroland's expansion this year should come close to the 3% rate that it has averaged since late 1997.
Nevertheless, some economists are urging the European Central Bank to follow the lead set last week by the Bank of England and, by cutting interest rates, take out an insurance policy against the possibility that American weakness might migrate across the Atlantic.
The decision facing the ECB is much trickier than the one the Bank of England had to deal with, however.
In some large European Union countries, notably in France, even though unemployment is still just over 9%, there are signs that labour and production bottlenecks are becoming so widespread that the last thing the economy needs is further monetary stimulus. What is most needed, says a former Finance Ministry economist, is several years of steady growth during which progress can be made in improving the underlying structure of Europe's economy, encouraging people back into the job market, improving training and reforming pensions systems.
On this view the ECB is best advised to keep up the pressure for structural reform to improve the long-term growth prospects in Euroland and not risk easing monetary policy too quickly, especially when it is still possible that the US slowdown could prove short-lived.
One man who feels that confidence in the underlying strength of Euroland's economies and their capacity to withstand a moderate slowdown in America's growth rate should not be underestimated is Jean-Claude Trichet, Governor of the Banque de France and also one of the most influential members of the ECB's governing Council.
In recent weeks Trichet has made clear his concerns about the bottlenecks appearing across most sectors of the French economy.
But he is also becoming increasingly optimistic about the longer-term outlook. He believes Europe, not just France, could be on the verge of experiencing the sort of improvement in productivity growth led by information and computer technology that has been described as a new economic "paradigm".
It is this "new economy" which many argue underpinned the remarkable inflation-free expansion of the United States economy from the mid-Nineties until it began to slow sharply late last year.
Speaking ahead of this weekend's meeting of the finance ministers of the Group of Seven major industrial countries - a meeting which the new US administration is likely to use to put Europe's economic potential under the microscope - Trichet said: "We are experiencing a progressive change of economic culture, not only in France but also in all of Europe."
He added: "It is our duty to help the maturing of this new 'paradigm', if I may use that word."
Interviewed in the Banque's splendid seventeenth-century offices just a stone's throw from the Louvre, Trichet said he agreed that the impact of information technology on the efficiency of European companies has yet to be seen in the statistics. …