European forecast: Optimistic and wobbly

Cologne, Germany -- European economists have a new phrase to describe their expectations for future growth. Out of fashion is "cautiously optimistic." In fashion is "moderately positive, but wobbly."

At least that's how Dr. Alexander Bursch, director of research at Deloitte Germany, described his economic forecast for Europe. In a presentation here at the Presidents Council Retail Trends event during the Internationale Eisenwarenmesse (International Hardware Fair), Bursch added his voice to the chorus calling for a recovery for both Europe and the United States. He also pointed to the U.S. situation as a model for how that recovery might play out. 

The question on the table was "After the Great Recession, what's next for Europe?" The short answer: slow growth of 0.7% to 1.2% in 2014. 

One difficulty, however, in predicting Eurozone growth is the disparate economies across the continent. Spain, Ireland, Portugal and Italy trail in growth and employment, while Poland, Germany and Austria lead the way. 

Across Europe, a 12% to 13% unemployment rate is unprecedented, plus it rises to about 25% in crisis countries. The recovery will be aided by reforms in Eurozone crisis countries that are gaining traction. Still, it will be "wobbly." 

"Don't expect a rubber band that springs back," he said. "It will be moderate, step-by-step recovery."

Lessons from the U.S. recovery are likely to play out in Europe, he said. Chief among them is the concept that Americans turned increasingly to lower-priced products and brands, and found them to be better than they expected. 

Post-recession, he expects consumers will stick to lower price points, shop with less brand loyalty and generally avoid risk where possible -- saving more and using the credit card less. 

"Consumers will start spending money again -- but more cautiously," he concluded.

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