Why the market is wrong about Emu

Core European growth is picking up. Late last year, I said growth disappointments would make the “Emu on time” outlook seem less probable by early 1997. Consumer spending would disappoint because of Maastricht masochism and the fiscal squeeze, and because of job losses and labour market deregulation.

Now the market believes that European monetary union (Emu) is in doubt because of dreadful growth, in both core and peripheral Europe. But the market is about to be proven wrong.