Western Europe: Is the recession over?

“The worst recession in the history of the Federal Republic is over,” said Oliver Santen in Germany’s Bild. Since the beginning of 2008, Germany, along with the rest of Europe and much of the world, has seen its economy shrink dramatically; thousands of workers have lost their jobs. But the tide has turned. Statistics just released from the second quarter of this year show growth of 0.3 percent. It’s not a lot, but it is a positive number, and most economists now say we have “pulled out of our nose dive and are heading for a soft landing.” Two factors are helping: The government stimulus package has begun to work, and German consumer confidence is back. True, there’s some pain yet to come. Unemployment, currently around 8 percent, will probably rise before it drops. But the end is in sight.

Don’t be so sure, said Olivier Provost in France’s La Tribune. Like Germany, France saw slight growth in the second quarter, which is good news—as far as it goes. But in both countries, the growth was driven more by consumer spending, which can be fleeting, than by corporate investment. And both countries are still shedding jobs. “Rising unemployment will eventually have a negative impact on household spending.” Moreover, we all depend on consumers in other countries, not just our own, to buy our goods and fuel our growth. Other countries, though, aren’t rebounding the way France and Germany are. Americans have traditionally been great consumers of European goods. But they bought on credit, leading to a “downward spiral that ended in the subprime crisis.” Now they’ve learned their lesson and are saving—“just when we want them to spend.”

At least France and Germany have the luxury of worrying that their growth might slow, said Sean O’Grady in Britain’s Independent. Where’s our growth? Have Germany and France really “managed the recession better” than Britain, which resorted to a “vast experiment in printing money”? The short answer is no. France was partly protected from the credit crunch, since a huge chunk of its economy is public sector. And “in relation to the size of their economy, the Germans have spent much more than the French or British on everything from job subsidies to a very generous car-scrappage scheme.” Everyone has been spending their way out of the recession, just like the Americans. The difference is that the French and Germans didn’t have to borrow in order to spend. Britain, like the U.S., did. Our recovery will therefore take longer; let’s just hope and pray that it is “not far away.”

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