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Prospects for Fiscal Consolidation in Europe

The macroeconomic outlook for the Euro Area has improved. The first signs of recovery have already started materialising and although the second quarter of 2009 saw GDP contract by 0.2 per cent in quarterly terms, the pace of the decline eased. The first quarter of this year, with GDP collapsing by 2.5 per cent, probably constituted the sharpest contraction in the deepest recession the Euro Area has ever experienced.