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"Massive growth in economic uncertainty"

Friday, August 31 07:28:46

Economic uncertainty in Europe is rising "massively" as growth prospects worsen, especially for debt-strapped southern euro zone members, European Central Bank Governing Council member Ewald Nowotny said.

Nowotny told reporters late on Thursday he could not reveal the latest ECB forecasts for growth in the euro zone before their official release. "But I can say this much: there will not be an improvement, but rather a deterioration in expectations," he said, noting the divergence in growth rates between northern and southern members was widening.

"We have to expect negative growth rates, contraction, in practically all the southern countries in 2012, and France roughly stagnation. That means uncertainty is thus growing massively," he said. "I think it is important in such a sensitive situation that one assumes that one takes every step in monetary or economic policy with great caution." ( C) Reuters