European and UK convergence to slip
Economic convergence between the UK and Euroland is less likely to continue in 2002, according to new research published today.
Growth in Euroland is expected to be below 1% compared to just under 2% for the UK, as calculated by economists at PricewaterhouseCoopers.
John Hawksworth, head of the macroeconomics unit at PwC, said: ‘The latest trends in our index confirm our earlier expectations that 2001 would see a further convergence of the UK and Euroland economies as a whole.
‘Further convergence in 2002 seems unlikely as we expect the UK to grow somewhat faster than Euroland this year, but the two economies will still remain significantly more convergent than when the Treasury first assessed its five tests in 1997.’
However by 2003 both economies are predicted to be ‘back on a cyclical upswing’ with a ‘trend towards increased convergence’ to be resumed.