Bloomberg News

European Growth Will Slow to 2.7 Percent This Year, S&P Says

January 18, 2007

Economic growth in Europe will slow this year amid higher interest rates, Standard & Poor's said today.

Average economic expansion of 41 European countries will slow to 2.7 percent in 2007 from 3.2 percent last year, S&P told reporters today in London. The estimate includes European Union countries as well as Balkan countries, Turkey, Iceland, Russia and others.

The European Central Bank, which sets interest rates for 13 countries, has raised rates six times since December 2005 to keep a lid on inflation as growth picked up. Central banks in the U.K., Switzerland and Iceland have also raised borrowing costs in the last year.

``In an environment where interest rates are rising, that will lead to a reduction of growth in the region,'' said Moritz Kraemer, a credit analyst at S&P. ``The credit outlook for the region is largely unchanged.''

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net; Brian Swint in London at bswint@bloomberg.net.

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net.


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