Growth is slowing, warns ECB

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The Independent Online
THE CHIEF economist of the European Central Bank yesterday warned that growth in the euro area was "weakening significantly", fuelling hopes of a cut in European interest rates, writes Lea Paterson.

Otmar Issing, a member of the ECB's rate-setting panel, argued that the sluggish German economy, which contracted in 1998's last quarter, was dragging down the rest of the Europe.

Mr Issing said: "The situation in Euroland, viewed as a whole, has weakened. There is no sign of inflationary dangers and deflation isn't at the door."

Analysts said Mr Issing's comments suggest that the ECB is increasingly worried about European growth prospects. There is growing speculation that the ECB will soon move to cut interest rates again.