It is funny how headlines can mislead. Yesterday and today the media is full of talk about how the EU commission has released a forecast to indicate the UK, Spain and Germany will hit recession this year. Italy and France, by contrast, will get off.

But a cursory glimpse at the report reveals a quite different, and far more interesting, picture.

The EU commission report forecast growth in GDP for the UK of minus 0.2 per cent in both the third and fourth quarter of this year. It expects Spain to contract by 0.1, followed by 0.3 per cent, and Germany’s contraction is expected to be one quarter ahead of the UK and Spain’s, with negative growth in the second and third quarters.

France, by contrast, is expected to avoid recession – by a whisker – as is the case for Italy.

But if, instead, you look at projected annual growth for 2008, then a different story emerges. The report expects the UK to expand by 1.1 per cent this year; that’s not good, but decidedly healthy compared to the expected growth rate this year of just 0.1 per cent for Italy, and marginally better than an expected growth rate of 1 per cent for France.

It just goes to show, you need to see the whole picture before you make a judgement.

The report also suggested the slowdown in credit was down more to lack of demand than supply. It said: “There is, however, no credit crunch in the EU or the euro area as a whole at present… Falling house prices and reduced investor demand for asset-backed securities and covered bonds have led banks to reduce their exposures to the mortgage market. Notwithstanding tighter lending standards, bank lending to nonfinancial corporations remains strong, growing at 13.2 per cent in the same period. The slowdown in credit aggregates appears to be due mainly to lower demand for loans, driven by traditional determinants (activity and interest rates), rather than to credit supply constraints.”

The EU report was less than sanguine about the US: “Although the annual growth rate for 2008 has risen, due to the strong performance in the first half of the year, the underlying growth momentum remains weak,” said the report. “Continued decline in house prices and a weakening of the labour market could depress consumer spending for an extended period. Although net exports should continue to provide some offset, GDP growth is expected to turn negative in the second half of 2008.”

But perhaps the report can best be summarized below: