The European press has been too preoccupied with post 9/11 and the prospective attack on Iraq thus economic recovery, which will be nose-diving took a back seat. But the European Central Bank woke up last week and warned the current economic uncertainty meant the long-expected pick-up would be delayed until next year.
Leaving interest rates unchanged but hinting at the prospect of a cut in borrowing costs in the months ahead, ECB chief Wim Duisenberg also expressed concern about the impact of a war in Iraq on the global economy.
“Looking ahead, the most likely scenario is that of ongoing, albeit modest, growth in real GDP in the second half of the year, with growth rates in line with potential growth in 2003,” said Duisenberg.
The latest ECB meeting also came as signs have been growing that shrinking economic growth could result in the budget deficits in several Eurozone states expanding dangerously close to the three per cent limit as set out in the currency bloc’s Stability and Growth Pact. Reiterating the views held by European watchdogs Duisenberg launched a strong call for countries to protect their public finances. Duisenberg said that it seemed to be “more warranted than ever to call on member countries to remain committed to the Stability and Growth Pact,” which is aimed at shoring up market confidence in the Euro.
So far so good from the ECB and its pragmatic anchorman but are the European politicians listening? (667)