There is no recovery yet: its predicted onset has been postponed by the experts to the last quarter of 2005. The European Union is grappling with the problem of the future of the continental economy, crushed between the growing successes of its Asian competitors (especially China and India) and of the USA, the rising price of petroleum, and a difficult though currently stable internal situation. Interventions on these issues have recently been made by Tony Blair, who has held the revolving Presidency of the European Council since 1st July, the President of the European Central Bank Trichet, the European Parliament and the Commission, also in view of the extraordinary summit planned for October, which will be dedicated to social Europe and the application of the revamped Lisbon Strategy. The experts of the Commission have also drawn up the quarterly report on economic trends, which was presented in Brussels on 19 July. According to this report, “the surge in oil prices and the loss of impetus of world manufacturing output are the causes of the slowdown of economic growth in the Euro zone in the months between April and June”. The report however also points out “some positive signals at the European and world level”, which “give rise to hopes of an acceleration of growth in the second half of 2005”. Various factors give some comfort to the economists of the EU Executive: “the signs that the slowdown of the world economy is reaching its end and that world trade is beginning to grow again”; and “the recent adjustment of the exchange rate between euro and dollar”, which ought to benefit exporting firms. Moreover, the experts observe that “the monetary and financial conditions remain favourable and are currently accompanied by signs of growing confidence”. The “differentials in growth” in the Euro zone also emerge from the quarterly report; they especially concern long-term development. The suggested remedies include the better functioning of labour markets and the growth of competition in product markets. “A particular reason for the differentials between growth rates could consist in the fragmentation of the housebuilding and mortgage markets”. Since the end of the 1990s, “the real prices of houses in the euro area have registered a considerable increase especially due to the drop in interest rates. But they have not necessarily been a significant source of economic resistance, contrary to what has been observed in the UK and the USA”.
