The leading economies of the Europe have slowed down in third quarter like the US. The economists and analysts have been in alert mode since it became known that the US growth was slowing down in second half. It is interesting to see these analysts are not worried that much for Europe’s slow growth in second half of 2010.
Europe’s largest economy, Germany is estimated to record a sharp decline in its growth to 0.7% in third quarter comparing with its second quarter growth of 2.3%, which is revised upwards from 2.2%, the previous figure. France GDP growth declined from 0.7% in second quarter to 0.4% in third quarter. Italy’s growth declined to 0.2% from 0.5% of second quarter.
The Eurozone countries grew by 0.4% on average which is a sharp decline from its second quarter average growth of 1%. Last month it was revealed that the UK grew by 0.8% in third quarter, less than 1.2% of second quarter. The US is expected to grow by 0.5% in third a slight increase from its second quarter figure of 0.4%. Japan grew in second quarter by 0.4%, which declined from 1.2% of its first quarter growth figure. Its third quarter figure is not yet released.
France finance minister Christine Lagarde was quoted by BBC News as saying that the recovery was looking solid and particularly household spending had picked up. France’s budget deficit is expected to be 7.7% of GDP for this year. France increased the retirement age from 60 to 62 and eligibility age for full pension from 65 to 67, in a bid to reduce the government spending, though he said pension reform was aimed to save the pension system itself. France is said to have terminated some tax breaks to reduce budget deficit.
While the IMF is advocating spending cuts and tax increases for fiscal consolidation, some analysts are of the view that these measures would further slow the growth of Europe in next year.