Nice - EU finance ministers will try to figure out ways to lift a European economy flirting with a recession that many officials won't even name when they meet for two days of talks starting on Friday.
It's "a sharper-than-expected slowdown" to the European Commission and a "depressed episode" to European Central Bank President Jean-Claude Trichet.
But it's definitely a recession for Germany, Spain and Britain, according to EU forecasts this week, with their economies shrinking for two consecutive quarters. France and Italy may stagnate, hardly a relief for two countries that never sped up during the recent boom.
Yet Trichet, speaking at a conference on the eve of the meeting of EU finance ministers and central bankers in Nice, said central bankers' main preoccupation is keeping inflation in check.
"We all have to cope with an inflationary challenge of first magnitude," he said late on Thursday.
"We all agree on one thing: we have to deliver price stability in the medium term and solidly anchor inflation expectations."
For European governments, slowing growth rather than inflation is their main preoccupation. It is forcing them to change spending plans as tax revenues sink and jobless lines lengthen. Instead of cutting their budget deficits as euro nations pledged last year, some will be piling on debt in the year ahead.
That reverses a major recent effort to bring the 15 euro economies in line and stabilise their shared currency by bringing yearly budget deficits under a limit that all of them met for the first time this year - ten years after the euro launched.
Many countries will claim they have few other choices open to them.
Euro nations have handed over the main lever over their economies - changing borrowing costs to cool or heat up growth - to an independent central bank that won't cut rates while inflation soars.
Some favour a costly economic stimulus package. Spain this week announced a $4.3bn credit line for the construction industry, which was once the driving force behind an economy that posted a decade of solid and sometimes robust growth.
France last year launched a program of tax cuts that hit growth - and will likely deepen its deficit.
Italy demands EU effort
Only Italy is demanding a wider EU effort, calling for an EU-funded bank to spend billions on infrastructure projects that would boost growth.
But for EU officials, the cause of current economic woes mostly lie outside Europe and the medicine they prescribe is the same dose they've tried to offer governments for years: pay off debt, open up to more competition, reform labour markets and social spending.
French Finance Minister Christine Lagarde, current chair of the EU finance minister meetings, urged her colleagues - and her own government - to take the medicine. Speaking before Trichet, she told an audience of finance professionals that Italy, Portugal, Greece and France needs a "continuation of the structural reforms" following the example of Germany, Austria and Sweden.
That might help tackle deeper problems but won't solve Europe's current challenges. The euro has been strong because the dollar has been weak - hurting European exports to its biggest trading partner, the United States.
Lagarde welcomed the recent fall back of the euro, saying she is "pleased today that the euro is slightly below $1.40".
At the same time, energy costs have sent inflation soaring, adding costs to companies and holding back consumer spending that has barely risen for the past year. Businesses and consumers are worried, with confidence slumping as they are pessimistic about the months ahead.
There is some relief in sight as the euro sinks and oil prices tumble but there's also plenty of gloom on the horizon. A world economic slowdown would hit one of the bright spots for the European economy: strong exports to emerging economies such as China, Brazil and Russia.
At the same time the global credit crisis that helped trigger Europe's slowdown is not easing as quickly as hoped.
Ministers will discuss how they can fireproof Europe's banking sector, ease credit conditions and step up supervision for banks that operate in several different countries.
Two governments, Britain and Denmark, have already stepped in to rescue troubled mortgage lenders and supervisors seek rules for how they will deal with a similar situation for a bank - just days after the US government shored up mortgage giants Fannie Mae and Freddie Mac.
- AP