UK and Europe convergence on track
UK and Euroland are expected to see renewed economic convergence in 2002 and 2003 after expectations fell in mid-2001, according to new analysis.
Economists at PricewaterhouseCoopers are upbeat again about the prospects for broad economic convergence with both economies showing average growth expectations of around 1.25-1.5% in 2002 and around 2.5-3% in 2003.
The news contrasts with analysis from the second and third quarters in 2001 when growth held up much better in the UK than in Euroland.
John Hawksworth, head of the macroeconomics unit at PwC, said: ‘The latest trends in our index suggest that cyclical convergence of the UK and Euroland economies is back on track after a brief period of apparent divergence in mid-2001: the UK ship has rejoined the convoy.’
But, the firm’s economists have not ruled out the possibility of the two economies diverging in the future due to some structural differences causing the two ‘to react differently to shocks in the future’.