Europe’s economy looks to be heading for trouble

Europe’s summerpmiecbecb was a strange mixture of heavy rainfall and wildfires. The continent’s economy was also plagued by extremes. Inflation remained hot: prices rose by 5.3% in August compared with a year earlier. And officials are increasingly worried by the cloudy growth outlook. A recent drop in the purchasing managers’ index () suggests the bloc is facing recession.Ahead of the next meeting of the European Central Bank () on September 14th, policymakers will be worried by the possible emergence of stagflation (a situation in which low growth is paired with entrenched inflation). Christine Lagarde, the central bank’s president, recently reiterated her commitment to bringing down inflation and setting interest rates at “sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our 2% medium-term target”. In plain English: the would much prefer a “hard landing”, featuring economic pain, to failing to reduce price rises.