Austerity Cuts Will Not Spark Recession

LONDON, July 21, 2010 /PRNewswire/ -- In spite of massive austerity cuts, Europe is likely to avoid a double dip recession, says the Economist Intelligence Unit.

In an interview with financial broadcaster http://www.cantos.com, Director of Global Forecasting Robert Ward says the EIU's forecast for the global economy remains one of slow growth with a slowdown in that growth for the second half of 2010.

Despite the positives expected from structural reforms he warns of two "danger points" - stress tests to be announced by European banks and stabilization mechanisms designed to bail out the euro.

"Now if neither of these really gains traction in terms of convincing the markets that they're able to backstop everything, then you could get another round of volatility which would of course be bad for consumer sentiment again, bad for banks, particularly if counterparty risk remains elevated and this would then feed back in a negative feedback loop into the broader economies which are now facing austerity. So there are some issues there to be worried about."

The video interview and transcript are available now on http://www.cantos.com/eiu.

Cantos.com, the online financial broadcaster, features in-depth interviews, documentaries and webcasts with economists, analysts and senior company executives. If you would like to contact us, please email [email protected] or phone 44(0)207-936-1352.

SOURCE Economist Intelligence Unit

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