European economies getting more similar but differences persist, according to PwC

The firm has published an ‘EMU Convergence Index’ which ‘assesses convergence relative to the Euroland average’ for 19 European countries.

It combines data on ten key economic variables.

The study concludes fiscal convergence within Euroland has increased markedly since 1992, particularly in Southern Europe, but that real economic divergence within Euroland persists.

Greece, Sweden and Finland have all become significantly more convergent with the Euroland average since 1992.

ButPortugal, the Netherlands and Ireland are showing significant divergence from the average because of their relatively strong performance.

The report also saysof the four EU countries currently outside EMU, the UK is least convergent, although it is not far behind Denmark.

Greece has made great progress since 1992 and now looks a strong candidate on economic grounds for early EMU membership, as does Sweden, the firm added.

PwC predicts Western European GDP growth will pick up from around 2% in 1999 to around 2.75% in 2000.

Of the large economies, growth is likely to be fastest in Spain, at 3.25%, and slowest in Germany and Italy (both 2.5%), it says.

PwC Chief Economist, Rosemary Radcliffe commented that:’The relative weakness of the euro during 1999, far from being an economic problem, actually operated to the competitive advantage of Euroland industry last year, contributing to economic growth of just over 2% in 1999. This is significantly better than might have been expected had the euro remained at its launch rate of $1.17 throughout 1999.’

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