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After just a year of moderate growth, the momentum of the EU economy began to slow in spring 2014. In
the second half of this year, GDP growth in the EU is set to be very modest, while in the euro area it will
almost stagnate. Among the largest euro area Member States, we see growth increasing in Spain where
unemployment remains very high, growth coming to a stop in Germany after a very strong first quarter,
protracted stagnation in France, and contraction in Italy. Financial markets have adjusted sharply in recent
weeks as the prospect of more modest growth, not just in Europe but globally, has ended a period of yield
hunting and risk compression.