The Euro-Zone Economy Is Set for a Painful Reckoning
ECB rate hikes will trim 4% from economic output, research shows, a hit that will coincide with a return of restraints on public spending
ECB President Christine Lagarde acknowledged last month the near-term economic outlook has “deteriorated.”
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The euro zone’s custodians have set a course for the biggest policy-inflicted blow since the currency was created.
The combination of higher interest rates and renewed restraint in government spending is threatening to strangle expansion and raise the risk of a nasty recession.