The European Commission has again reduced its growth forecast for the EU. It now sees a 4% decline in GDP this year, and for the first time is suggesting that recovery will be delayed until mid-2010. As a result, it expects unemployment to reach 11%, which will further slow consumer spending.
'Across the pond', banks are busy increasing interest rates at a furious pace to both commerical and individual borrowers. The US Federal Reserve says 80% of banks have increased the rates they charge on commercial loans, whilst many banks have apparently doubled, or even tripled, credit card rates.
The only good news is that the Fed says bank lending criteria are finally starting to stabilise after 2 years of tightening. It reports that 'only' 40% of banks tightened their criteria in Q1, down from 55% in Q4.