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US election key to Europe's recovery

Tuesday, November 06, 2012 - 02:03

Nov. 06 - As Europe struggles to keep its finances in order, America's election result could determine whether the bloc will be set back even further. Joanne Nicholson reports

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There's a whole ocean between the United States and France, but in Harry's Bar in Paris, they're almost always in sync with American voters. As Europe struggles to clamber out of its debt crisis, the predications made here are being watched more closely than ever before. America has its own debt crisis to sort. But it depends which path US voters chose, Obama's Democrat road to raising taxes, or Romney's Republican route to spending cuts. Christian Schulz is an economist at Berenberg Bank SOUNDBITE (English) CHRISTIAN SCHULZ, ECONOMIST, BERENBERG BANK, SAYING: "The key thing for Europe is whichever route they take, they don't do it too quickly so that demand for European exports won't collapse because Europe, going through its own crisis, needs strong export markets and US is one of the most important ones." Slow movement in the European markets shows investors are holding back. America is teetering on the edge of the so called "fiscal cliff". Investors are worried about a barrage of tax hikes and spending cuts due to be triggered in January unless Congress can cut a deal to stop it as soon as possible after the election. Polls indicate Obama and Romney are neck and neck and there are fears the U.S. economy could tip back into recession next year. Wayne Bowers is a European asset manager SOUNDBITE (English) WAYNE BOWERS, CEO, ASSET MANAGEMENT, NORTHERN TRUST, SAYING: "If there's a significant digging of heels in from a house of representative or from a congress perspective that could erode and potentially weaken the growth picture going forward which will have a knock on effect in terms of growth in the European market place." There's still no sign of a concrete solution to stabilizing the euro zone. On Thursday, the ECB is expected to hold interest rates despite a drop in German business confidence and a decline in euro zone manufacturing for the 15th month running. Europe's debt crisis may still be a threat to global growth. But America's ticking time bomb could set Europe's attempts at recovery back even further

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US election key to Europe's recovery

Tuesday, November 06, 2012 - 02:03