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ECB cuts European base rates to 1.5%

As the European Central Bank (ECB) announced a reduction in European base rates from 2% to 1.5% it appears as though the ECB is also contemplating a policy of quantitative easing such as that ongoing in the US, UK and Japan.

This is a drastic measure for the EU authorities as just a few weeks ago there had apparently been hopes that the fall in European economies would not be as bad as some had been forecasting. The potential introduction of quantitative easing would appear to allay these hopes with the authorities apparently admitting defeat in their quest to use the more traditional base rate reduction policy.

While there has been significant criticism of Gordon Brown and his handling of the UK economy over the last 12 months, it appears as though the European economy as a whole is following the same downward path. Further bailouts are expected in the short to medium term such as those seen in some of the ex-Communist countries which recently joined the EU. Slowly but surely the cost of these bailouts is growing with many people uncertain as to where funds will come from in the future, should the situation worsen. It appears that over the last few weeks the worldwide economy has taken a serious lurch downwards and we are now staring a potential depression in the face.

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