Europe's Political Leaders Predict Growth, But Businesses Foresee Tougher Times

Reality trumps parliamentary happy-talk

Europe's leaders are starting to talk, cautiously, about economic recovery. "Growth is expected to pick up in the second half of 2012 and gather speed in 2013," Olli Rehn, the European Commissioner for Economic and Monetary Affairs, wrote in a Dec. 10 column in the Financial Times.

Sounds encouraging—but Europe Inc. isn't buying it. From steelmakers to shampoo sellers, companies across the region are hunkering down for what they predict will be years of stagnation.

In the latest show of pessimism, on Dec. 21, Luxembourg-based steel group ArcelorMittal (MT)took a $4.3 billion writedown on its European units. Steel demand in the region has already declined 29 percent since 2007, the company said in a statement. "This weaker demand environment, and expectations that it will persist over the near and medium term, led to a downward revision of cash flow expectations."