When will EU economy spring come?

Special Report:Global Financial Crisis

BEIJING, Feb. 5 -- As spillovers of the financial crisis are currently

affecting the "real" economies around the globe, the economic prospects of the

European Union (EU) and its member nations have become a focal point of

worldwide attention.

Germany:

According to the latest annual economic forecast by the Federal Statistical

Office, Germany will be in its deepest recession in 2009 ever since Federal

Germany was established some two decades ago. Its economy will contract 2.25

percent this year but will hopefully "warm up" in the latter half of the year.

Its foreign trade will slide 8.9 percent and the number of the jobless will

reach 3.5 million at the end of 2009, and its inflation risks will have gone up,

according to the forecast report.

The federal government first approved a 500-billion as federal "fictitious

bailout" plan and latter ratified 32 billion and 50 billion euro rescue packages

with money to be used for highways, schools and other public works projects. The

second rescue package is the biggest-ever stimulus package Germany has ever

thrashed out in the post-war period.

In addition to a recession for this year, Federal Germany has experienced

four recessions or "years of crisis" over the past four-plus decades in 1967,

1975, 1982 and 1993 with its economic growth rate of -0.3 percent, -0.9 percent,

-0.4 percent and -0.8 percent respectively, notes the German "Der Spiegel"

weekly. From these figures, people can come to see how grave the extent of

recession for this year can be!

It may not be so difficult for Germany in 2009 to keep the budget deficit

within the EU-mandated limit of 3 percent of GDP, acknowledged German Finance

Minister Peer Steinbruck, but it will be hard to say for the next year.

Britain:

Official figures released on Jan. 20 showed that the British government had

run up total debts of 697.5 billion pounds, or 47.5 percent of GDP, by the end

of 2008.

The British government announced a 400 billion pound bailout plan in

October 2008, but without much substantial effect. On Jan. 19, Prime Minister

Gordon Brown approved a second rescue plan for Britain's ailing banks.

Meanwhile, he announced to set aside as much as 50 billion pounds (or 74 billion

U.S. dollars) to create a special fund for the Bank of England to buy

high-quality government bonds in a bid to increase lending to related

enterprises. According to the Monetary Policy Committee of the Bank of England

recently, the British economy will bounce back by the year end of 2010.

For a long period of time, Britain has kept itself away from the euro zone,

and the ongoing global financial crisis will give rise to a renewed debate about

euro zone membership.

France:

With the onslaught of global financial crisis, French economy currently has

a tougher and more difficult time and, in fact, French economy has been hitting

a "red light zone" in all sense.

French lawmakers in late October 2008 approved a huge 360 billion-euro

rescue package to bail out banks, which were severely affected the credit

crisis. In early December last year, President Nicolas Sarkozy unveiled a 26

billion euro stimulus plan for the faltering economy. France weighs support

program for ailing automakers and on Jan. 20 decided to pump 5-6 billion euro

(up to 7.79 billion U.S. dollars) for troubled automakers. Moreover, France also

plans to input 175 billion euro in science, technology, environmental protection

and other spheres over the next three years.

To date, France's total debts have amounted to 1.3 trillion euro with an

average of 20,000 euro per capita. It has been estimated that France would have

a deficit of 5.4 percent of GDP this year. Its GDP rose by 0.7 percent in 2008

and is expected to contract 1.9 percent in 2009.

European Union:

EU predicts that its economy as a whole will contract or decline 1.8

percent, whereas it forecasted two months earlier that its economic growth would

increase by 0.2 percent. All its major economies have been sinking into

recession, and the British, German, Italian and French economies will trim 2.8

percent, 2.3 percent, 2 percent and 1.8 percent respectively.

Jean Claude Junker, the prime minister of Luxemburg and president of the

Euro zone group, deems that the European economy would have to "get through the

next two years" before resuming normal by 2011. He went on to predict that the

positive role of interest rate cut by the European Central Bank is expected to

manifest in the later half of 2010.

(Source: People's Daily Online)