Countdown to missed opportunity for EU economy

Mon Nov 24, 2014 2:03am EST
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By Paul Taylor

PARIS (Reuters) - The countdown has begun to what threatens to be a missed opportunity to revive Europe's stalled economy.

When European Union leaders meet on Dec. 18-19 under new management, they have a chance to launch a joint assault on the economic stagnation and high unemployment that are fuelling disenchantment and anti-EU protest among voters.

All the signs are they are set to fall short.

The 18-nation euro zone is struggling to pull out of the aftermath of its debt crisis, aggravated by the economic impact of a standoff with Russia over Ukraine.

Inflation and growth are hovering below 1 percent while unemployment is stuck at 11.5 percent, and more than double that level in Spain and Greece. Even EU powerhouse Germany has hit a slowdown.

Former U.S. Treasury Secretary Larry Summers says Europe risks "secular stagnation" - a long-term, self-perpetuating slump similar to the one that followed the Great Depression in the 1930s.

France's economy is flatlining, Italy's has fallen back into recession and both countries are failing to cut their budget deficits and debt in line with EU rules, causing tension with Brussels and Berlin.

"Without jobs and growth, the European idea itself is in danger," outgoing European Council President Herman Van Rompuy said last week. His successor, Poland's Donald Tusk, will have the task of trying to forge a summit agreement on a new economic policy mix.   Continued...

A euro logo sculpture stands in front the headquarters of the European Central Bank (ECB) in Frankfurt October 26, 2014.      REUTERS/Ralph Orlowski