The European economy has begun the new year in good health. Euro-zone GDP expanded at its fastest rate for six years in 2006 and most forward-looking indicators suggest that growth is set to remain solid in the coming quarters. The Scandinavian economies, the UK and Switzerland are also all growing at robust rates. Tighter fiscal and monetary policy, strong currencies and a weaker global demand environment are likely to slow the European economy a little in 2007. Nonetheless, growth should still compare favourably to the rates seen in Europe in recent years and to the likely performance of other major economies such as the US and Japan.
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