hsbc predicts reduced spending power will see eurozone economy slow, leading to rate cuts in 2007 ECB rate rises to continue until year-end

European Central Bank (ECB) rates should increase to 3.5% by the end of this year, but are expected to start decreasing again in 2007, according to HSBC Global Research. HSBC said the rises should reduce some of the positive effects of low interest rates and could hit economies such as Spain and Ireland. The group said these countries had high debt levels and negative real wage growth. For example, figures from the bank showed Spain's household borrowing had increased 28% for the year, while in Ireland this was 25%. Furthermore, the statistics showed consumer spending in Spain, which rep...