The European economy is slowing. On February 21, 2008, the European Commission reduced its forecast of 2008 real GDP growth from 2.2 per cent to 1.8 per cent for the European Area.

For all of 2007, real GDP was up 2.6 per cent, down from 2.7 per cent growth in 2006, but up from a 1.4 per cent gain in 2005. In February, the unemployment rate in EU-15 stayed at 7.1 per cent, the best in eight years.

The consumer price index was estimated as being up 3.5 per cent in March from a year ago, the biggest increase in 15 years. On June 6, 2007, the European Central Bank raised its key interest rate from 3.75 pe cent to 4.00 per cent, the highest level in almost four years.

In terms of economic freedom, old Europe still lags behind. The Heritage Foundation has the three largest economies, Germany, France, and Italy, ranked 19th, 45th, and 60th respectively in the world.

The governments in those same three countries consume 47 per cent, 53 per cent, and 48 per cent of their nation's incomes, making it very hard for the private sector to grow. Germany's new government worked out a deal to lower income tax rates on businesses, but they also increased the value-added tax in 2007 from 16 per cent to 19 per cent -- not a sign of progress (just ask Japan how their value added tax increase went in 1997).

One bright light in Europe is Ireland. The Heritage Foundation ranked them 7th in terms of economic freedom. Their government spends 34% of their national income - much lower than the rest of Europe.

And, surprise, they are consistently among the lowest unemployment rates in Europe. It is too bad the Irish don't run the European Union. On November 9, 2007, the European Commission estimated real GDP growth at 2.2 per cent in 2008.