Western Europe: Slowing Down

Throughout its remarkable postwar prosperity, Western Europe has reacted fast to fight inflation. Lately, it may have overreacted: with country after country splashing cold water on overheated economies, icicles have started forming. After clipping along at a 5.6% pace in 1964, the Continent's overall economic growth rate dropped to 4% in each of the past two years, is likely to slow down in 1967 to 3.5%—the smallest increase in more than 15 years. And in many countries, incipient recession is a worse threat than inflation.

Basic to the situation is the fact that Western Europe's two biggest economic powers, West Germany...

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