After two years of rapid expansion, the European economy is set to slow sharply in 2008 in response to the combination of weakening global activity, previous increases in interest rates, tighter credit conditions and strong currencies. Nonetheless, the relative lack of the major economic imbalances which look set to depress growth in the US and UK for several years suggests that the region should continue to fare relatively well, compared both to its major competitors and to its performance during previous global downswings.
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