ECB begins to turn down the fiscal stimulus flame
The European Central Bank (ECB) has today begun to turn down the fiscal stimulus flame which has helped the European economy recover over the last few months. There has also been an increase in the forecast rate of economic growth for 2010 which is now expected to be in the region of 0.8%. It also appears that European interest rates will increase in the short to medium term as slowly but surely we move back to more traditional interest-rate levels and hopefully a more balanced economic performance.
The fact that the ECB is even looking towards reducing the fiscal stimulus programs, introduced over the last few months, is a massive plus point in the short to medium term. While there is concern in countries such as the UK that any reduction in fiscal stimulus programs specifically aimed at the UK may weaken the UK economy, there are no such fears for the European economy. This would appear to be a major difference between the European economy and the UK economy, with the UK amongst the worst performing economies over the last few months.
It is also believed that the UK will be one of the last developed country economies in the world to escape the clutches of the worldwide economic slowdown.
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