Towards two-speed growth in the eurozone? - Economic recovery in the eurozone is slowly picking up and the latest quarterly report, Eurozone Forecast, from Ernst & Young forecasts growth of 0.8% in 2010 and 1.3% in 2011, but the gap between southern and northern Europe is growing. Southern eurozone countries will be lucky to avoid a “lost decade”, but northern eurozone countries are expected to perform better due to greater competitiveness. Overall, unemployment is the most pressing problem in the eurozone where a record 16.8 million unemployed people are expected by the start of 2011. It is highly likely that corporate investment will rise slightly in 2011 but is unlikely to return to pre-crisis levels until 2015. Poor growth in consumption is forecast, of between 1% and 1.8% next year. Ernst & Young confirms a trend noted in the previous quarterly report - that the eurozone is becoming a two-speed economy. Average GDP is expected to grow in the northern eurozone countries (Germany, France, the Netherlands and Belgium) by 1.7% a year in 2010, 2011 and 2012 due to their strong competitiveness, but Eurozone Forecast expects a 0.1% contraction of the economy in southern eurozone states over the same period. Economic activity in Greece, Spain and Portugal is not expected to return to pre-crisis levels until 2014. The report forecasts that the euro will fall by the end of 2011 to US$1.05 but then gradually rise in value as the eurozone economy picks up. It is forecast that by the end of 2011, the euro will have lost 20% of its value against the highest level it reached earlier in 2010. In light of the poor growth forecasts and the absence of inflationary risks, Eurozone Forecast does not anticipate any change in European Central Bank interest rates until summer 2011. (I.L./transl.fl)