Russia’s financial crisis is slowly yet surely spilling into Europe.

BRITAIN and France, the second and third-biggest European economies, racked up record trade deficits last year as an appreciation in the euro and the pound curbed export growth.

FEW would have predicted the euro area would grow faster than the US and newly re-energised Japan at some point this year, yet that’s what happened.

Stephen Roach, chief economist at Morgan Stanley, said the US economy faces deflationary risks as part of the continued unwinding of the stock market bubble, which includes the possibility of multiple dips back into recession for several years to come.