Nov.07 - While Obama's approach will help protect Europe's export market, the so-called fiscal cliff still poses a problem to Europe's recovery. Joanne Nicholson reports
Germany marked Obama's victory with cake. But many outside America are now wondering whether US economic policy will eat into Europe's attempts at recovery. At first glance, it's a relief for the EU that Obama's approach won out. The President's policy is more bearish and will focus on raising taxes. Here in Britain there are celebrations too. The Prime Minister's hoping for a trade deal between the EU and the US to help kick start the world economy. With an administration that's less likely to slash spending there's less chance of damage to Europe's export market. There was widespread relief in the euro zone in particular where new data added to the economic gloom The European Commission predicts the bloc's economy will barely grow next year. Spain's will contract by 1.4 percent and Italy will miss its deficit cutting targets. One Italian pensioner summed up the mood. (SOUNDBITE) (English) PENSIONER SERGIO DE IULIO, SAYING: "I am very glad that Obama has been re-elected. I think he is the best solution for Europe just because he is much more attentive to the situation in other countries." One of the President's first jobs is to tackle a split in Congress over the so called fiscal cliff - legislation that could trigger massive spending cuts in January. Germany in particular wants America to manage it in a way that won't hurt global growth. And European investors are clearly worried - European shares extended losses as relief over the election was eclipsed by the concerns Tobias Blattner is an economist at Daiwa Capital Markets SOUNDBITE (English) TOBIAS BLATTNER, EUROPEAN ECONOMIST, DAIWA CAPITAL MARKETS, SAYING: "Some kind of fiscal contraction will eventually come in the US and that will also slow growth in the global economy as a whole" So market uncertainty looks set to continue. And Europe must hold its breath while America decides whether to steer a course that will help the continent's attempt to escape the debt crisis or hinder it.