Signs of a European economic slowdown have been manifesting themselves for months . High energy prices and a weak euro have combined with political wrangling over economic policy to deflate the Continent s fastest economic growth in a decade. Statistics released over the Thanksgiving holiday reveal the British, Dutch, French, German and Italian economies the most productive in Europe are reporting slower growth and higher inflation than expected, while consumer and business confidence is declining rapidly. The European Central Bank and the European Commission admitted that growth for the year will be slower than expected and that 2001 growth is likely to be lower. Meanwhile, public disagreements between the two European institutions and member governments are becoming increasingly public, eroding public and investor confidence in the Union.
Japan is in worse shape .
As in Europe, economic and political authorities are arguing over the scope, pace, rationale and very existence of the country s economic rebound, after a decade of stagnation. Japanese banks announced they have purged the last of their bad loans. But Japanese banks have been writing off bad loans since 1998 and claiming each would be the last. Yet there have been few changes in lending practices on the part of the government, banks or businesses, so subsidized capital continues to support insolvent firms. O ver the past few years, however, there have been changes in their economic relationship with the United States that are more worrisome.