February 28, 2013
Despite growing confidence that Europe is managing its debt crisis and is poised to embark on a recovery, fresh developments on Friday indicated that the region continues to struggle to stimulate growth while cutting spending to pare deficits.
A top European official warned on Friday that the euro area economy would shrink for the second consecutive year and that countries like France and Spain would miss fiscal targets meant to ensure the stability of the common currency. Separately, the European Central Bank announced that the region’s banks planned to repay less than half the expected amount of low-interest loans they took out a year ago. And Moody’s Investors Service downgraded Britain’s government bonds from its top AAA rating.
The economic doldrums could set the stage for ripple effects for the United States, particularly in the financial markets.