Why Europe matters more to the UK economy than Asia or the Middle East - by Hamish McRae
Let's switch the focus back to Europe. There has been a stream of data from the US suggesting that the economy there may slip into recession, with the weakest period looking to be next spring. We'll have to see whether mooted interest rate cuts in America make much of a dent to this increasingly sombre outlook. By contrast, there has been a countervailing string of stories about the buoyancy of the Middle East and Asia, including the self-confident purchase by Abu Dhabi of 5 per cent of Citigroup, America's largest bank. But from a practical point of view as far as the UK economic outlook is concerned, Europe matters more. Continental Europe remains the UK's largest export market for physical goods, though not for invisible earnings. If, as I think it will, the UK avoids recession over the next couple of years, part of the thanks for that will be down to demand from our nearest neighbours across the Channel. So what is happening?
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