While America has pushed the pedal to the metal and with alarming speed has accelerated its productivity growth, it would seem that Europe on the other hand is experiencing a lack of progress in its labour markets and a deceleration in labour productivity. In this third annual report by the CEPS Macroeconomic Policy Group (MPG), distinguished economists from across Europe consider the state of the European economy, particularly with respect to three main issues: 1) Has the ‘new economy' arrived in Europe? 2) What is the state of European labour markets? And 3) Was the ECB's policy stance appropriate and does it have a sensible strategy that can be communicated clearly to the markets?