Unemployment in Europe Stays High Amid Signs of Recovery

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Moderate Recovery Is Forecast for India

MUMBAI, India — India’s economy is showing signs of a gradual recovery as gross domestic product increased at an annual rate of 4.8 percent in the three months that ended in September.

The growth surpassed the expectations of Reuters analysts, who projected a 4.6 percent rate, and was faster than the 4.4 percent pace seen in the previous quarter, which was the slowest growth in four years.

“The Indian economy has bottomed out on growth, and I think we are definitely seeing signs of a mild, moderate recovery — not just the gross domestic product numbers but in the results of individual companies,” said Saugata Bhattacharya, chief economist at Axis Bank. “However, in order to resuscitate growth, the government must improve investment channels, take measures towards fiscal consolidation, decontrol diesel prices and simplify the tax structure.”

The pickup in the September quarter was driven primarily by a good monsoon, which helped the agriculture sector expand at a 4.6 percent annual rate, according to the government figures released Friday. The sector that includes finance, insurance, real estate and business services also performed well, increasing by 10 percent; the sector for electricity, gas and water, increased 7.7 percent; and construction, 4.3 percent.

Industrial output, which rose 2 percent in the quarter from a year earlier, is also seen as one of the chief reasons for the improvement in the broader economy. A recovery in global demand and the depreciation of the rupee have helped Indian exports, which rose 13.5 percent to $27.27 billion in October.

“Strong export performance during the quarter has to a large extent aided in the pickup in demand-side G.D.P. growth,” said Bhupali Gursale, an economist at Angel Broking, a Mumbai brokerage firm. “We continue to believe that real G.D.P. growth during financial year 2014 as a whole is likely to range between 4.5 to 5 percent owing to near-term challenges in the macro environment, mainly from subdued domestic demand, fiscal constraints and the muted investment outlook.” India’s 2014 financial year begins in April.

Still, India faces significant challenges as it looks to revive its growth.

Hindered by an uncertain policy environment, subdued investor sentiment, red tape and inadequate infrastructure, the economy has decelerated from a high of 9 percent growth in 2010 to 5 percent growth in the fiscal year that ended last March. Although the central government has announced several policies since September that have eased the restrictions on foreign investment in India, they have yet to translate into real economic growth. Since July, a committee initiated by Prime Minister Manmohan Singh has removed the regulatory bottlenecks for $57 billion worth of infrastructure projects, but a majority of these projects have yet to get off the ground.

Difficulties also persist in certain segments of the economy, like the service sector, which makes up 80 percent of the Indian economy. And rising inflation remains a chief concern for Raghuram Rajan, the governor of India’s central bank, who has increased interest rates twice since he took office in September to battle price pressures. In October, wholesale inflation, the most closely watched price gauge in India, climbed to 7 percent, while consumer inflation hit 10 percent.

“The appointment of a new central bank governor in September has helped to stabilize the currency and financial markets, although this is unlikely to have had much of an impact on real economic activity,” wrote economists at Moody’s Analytics in a report last Monday.

Analysts do not foresee India’s return to high growth numbers in the short term.

“We don’t expect a serious uptick in growth in the near future as there are a lot of supply chain difficulties that have to be addressed, and monetary policy continues to remain quite tight because of severe inflation,” said Miguel Chanco, an economist who covers Asia at Capital Economics, a macroeconomic research company based in Singapore. “Growth is expected to pick up over the next few years, but very gradually, but we don’t think that growth will pick up back to its historical 8 percent growth rate any time soon.”

He added that he thought investor appetite would remain subdued until after the national elections next year. Investors, he said, are unsure whether Mr. Singh’s government will push through any politically unpopular decisions to reduce the deficit in the meantime.

Off the Charts: Jobs Recovery in Europe Is Also Painfully Slow

The decline was not large — 24,000 jobs, or 0.1 percent of the 19.3 million people out of work in May. But it was the first month in more than two years that there had been a decline.

Some, but not all, of that decline was in Germany, where unemployment has been falling even as it rose in other countries. Other euro zone countries that reported declines during the month were Austria, Finland, Ireland, Italy, Portugal, Slovenia and Spain. Two of the 17 countries in the zone, Estonia and Greece, have yet to report.

The accompanying charts show how the number of people unemployed has risen or fallen since March 2008, the month that overall unemployment in the euro zone hit its recent low. The charts also show the trends in two major countries outside the zone, Britain and the United States, where unemployment had bottomed out earlier. In the United States, the low was reached in October 2006, more than a year before the recession officially began.

It should be noted that the number of unemployed workers does not exactly equate to the number of people without jobs, which may be changing at a faster or slower rate. Discouraged workers who conclude they cannot get a job can drop out of the labor force, and thus not be counted. But when things begin to improve, those people can begin to search for employment and be newly counted among the unemployed.

Perhaps the most striking thing about the charts is how little improvement there has been in most of the countries shown. Germany is the striking exception to that, of course, and the number of unemployed in the United States has been falling steadily, if slowly, since 2010. On Friday, the government reported that the American unemployment rate fell to 7.4 percent in July, the lowest since December 2008. The number of people out of work in Britain fell in 2012 but has stabilized in recent months.

Among the most troubled countries in the euro zone, only in Ireland has there been a significant decline in the number of unemployed workers, although the figure remains nearly one and a half times as high as it was in 2008. In Greece, the number out of work appeared to stabilize late last year, but it began to rise again this year and was at the highest level yet in April, the last month for which data was available.

Perhaps the most extraordinary development has been in the Netherlands, where the number of unemployed workers has begun to rise rapidly after rising relatively slowly early in the credit crisis. Nonetheless, the latest unemployment rate for the Netherlands is only 6.8 percent, a figure that is lower than that of either the United States or Britain and about half the rate in Ireland.

For some countries, the reported unemployment rates remain very high. Although the number of unemployed workers in Portugal was reported to have fallen in both May and June, the unemployment rate remains at 17.4 percent, not far below the high of 17.8 percent reached in April. In neighboring Spain, two months of falling unemployment have reduced the rate by only 0.2 percentage points, to 26.3 percent. At least Spain no longer ranks as having the highest unemployment rate in the euro zone, as it did at the end of 2012. Greece, at 26.9 percent at last report, has regained that unfortunate position.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Fed Stimulus Still Needed to Help Recovery, Bernanke Says

While acknowledging the risks of historically low interest rates and the Fed’s aggressive policy of buying government bonds to help stimulate the economy, Mr. Bernanke said in testimony that “a premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.”

After his opening statement, however, Mr. Bernanke seemingly opened the door a bit wider to tapering down.

Under questioning by Representative Kevin Brady, a Texas Republican who chairs the Joint Economic Committee, Mr. Bernanke said the Fed could prepare to “take a step down” in the next few meetings if the outlook for the labor market improved.

“It’s dependent on the data,” he said. “If the outlook for the labor market improves, we would respond to that.”

Mr. Brady asked if the tapering could begin before Labor Day, prompting Mr. Bernanke to say, “I don’t know.”

“We are buying a certain amount of assets each month,” he continued. “We are looking for increased confidence and in steps respond to that.”

According to a summary of the Fed’s last Open Market Committee meeting released Wednesday afternoon, Fed policy makers were still tentative about dialing back on their efforts to boost growth at their session on April 30 and May 1.

“A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth,” the minutes of the meeting stated. However, views differed on just what that evidence would be and whether a tapering was indeed likely.

While “a few members expressed concerns that investor expectations of the cumulative size of the asset purchase program appeared to have increased somewhat since it was launched last September,” others members of the panel were less convinced, according to the minutes.

“In contrast, a few other members focused on evidence that market expectations about the total size of the program had changed little,” the record showed.

While there was no clear consensus on policy, most members agreed on the need “to communicate clearly that the pace and ultimate size of its asset purchases,” would depend on outlook for the economy, a stance echoed by Mr. Bernanke in his testimony earlier the day.

In his opening statement, Mr. Bernanke said that since last summer, “financial conditions in the euro area have improved somewhat,” helping lessen the headwinds faced by the American economy as well.

He noted that the federal government’s fiscal policy had become “significantly more restrictive,” even as the Fed had pursued a looser monetary policy. The expiration of the payroll tax reduction in January and tax increases, as well as automatic spending cuts imposed by Congress and lower military spending, will collectively “exert a substantial drag on the economy this year.”

Speculation had been rising in recent weeks that the Fed might be preparing to taper its bond purchases, which total $85 billion a month. The bond-buying program has been credited with increasing growth, but some observers worry it could create a bubble in the prices of assets like stocks.

At its most recent meeting this month, the Fed said it was “prepared to increase or reduce the pace of its asset purchases,” prompting some analysts to speculate that bond purchases might be reduced in the coming months.

“In considering whether a recalibration of the pace of its purchases is warranted,” Mr. Bernanke told the Joint Economic Committee, the Fed “will continue to assess the degree of progress made toward its objectives in light of incoming information.”

Stocks on Wall Street surged after Mr. Bernanke’s remarks but pulled back in afternoon trading.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

An earlier version of this article incorrectly described the timing given by Mr. Bernanke of a potential Fed move. He said the Fed could prepare to “take a step down” in the next few meetings, not the next few weeks.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

After a Strong Recovery, China’s Economy Unexpectedly Stumbles Again

HONG KONG — Brightly hued men’s underwear in a rainbow of colors is no longer selling well in Europe for the Zhongtian Garments Company in Xiamen, China. Exports are down 30 percent in the last year.

Children’s guitars with bodies resembling cats and cartoon characters are losing their charm for Yuesen Musical Instrument Factory in Huainan, China. And at the Yuzhongniao Outdoor Products Company in Jinjiang, domestic sales and exports alike are declining this year. The Canton Fair, China’s biggest export event, ended on Sunday with few new orders. “We are not even getting many people browsing this time,” said Alice Hong, Yuzhongniao’s sales manager.

After a powerful recovery through the autumn and winter from a V-shaped downturn last summer, China’s economy is unexpectedly faltering once again. Exports are weak. The country’s domestic economy is still growing mostly because of huge increases in lending by state-controlled banks and a surge in off-balance sheet lending. Consumer spending is rising, but not fast enough to offset weakness in other sectors.

That combination has prompted growing concerns among economists and business executives about the sustainability of even 7.5 percent growth in China in the coming years, the government’s current goal after three decades of double-digit growth with only a few interruptions.

The latest sign of trouble came on Wednesday, when China’s General Administration of Customs announced export and import figures for April. On the surface, they looked fairly respectable: exports were up 14.7 percent from a year earlier, and imports were up 16.8 percent.

But April 2012 was an exceptionally bad month for Chinese exports and imports — indeed, dismal trade statistics for that month were the first sign that economic weakness during the preceding winter was turning into a precipitous decline.

This April’s trade figures appeared even weaker when economists looked closer and found that the export growth had been largely propelled by growth in exports to Hong Kong, up 57 percent, and to special customs zones in China for export later, up even faster.

Since Hong Kong’s own data has not been showing large increases in imports from China so far this year, the Chinese government has already opened an investigation into whether exporters are overinvoicing for shipments. Overstating exports can allow companies to evade currency controls and move money into China to profit from the gradual appreciation of the renminbi against the dollar.

Louis Kuijs, an economist in the Hong Kong office of the Royal Bank of Scotland, estimated that with the exclusion of overinvoicing, export growth came to only 5.7 percent.

Over the last few years, economists have tended to pay less attention to China’s exports because they were declining as a share of the country’s total economic output, because of weak overseas demand. But newer research suggests that China may still be dependent on exports.

The reason is that multinationals have been rapidly localizing their purchases of various items like computer chips and auto parts in China instead of importing them from other Asian neighbors. So while total exports may not have been rising quickly in recent years in China, the Chinese content in each dollar of exports has been increasing.

Mr. Kuijs estimated that 20.7 percent of China’s economic output came from exports last year, a figure that had bottomed out in 2009 at 19.7 percent.

In a bad sign for exports in the months ahead, the Canton Fair announced this week that export orders placed at this year’s spring session had fallen 1.4 percent from a year ago. It was the latest sign that steeply rising blue-collar wages in China and a gradually appreciating currency are starting to erode the country’s international competitiveness; foreign investment in China has also begun to level off, while surging in lower-wage countries in the region, like Cambodia and Vietnam.

Li Yong, the general manager at Yuesen Musical, said that many Japanese, Taiwanese and Korean companies in his industry had recently moved to Indonesia as costs climbed in China.

Hilda Wang contributed reporting.

Home Prices Rise, Seen Helping Economic Recovery

The S&P/Case Shiller index of 20 metropolitan areas released on Tuesday showed single-family home prices rose 9.3 percent in February from a year earlier.

The data reinforces the view that rising home prices could make Americans feel better about spending this year, helping counter a hit to economic growth from tax hikes and government spending cuts.

"This will be a powerful positive fundamental not only for housing but presumably helpful for consumer spending as well," said Stephen Stanley an economist at Pierpont Securities in Stamford, Connecticut.

Another report showed U.S. consumer confidence rebounded in April as Americans felt better about the outlook for the economy and their income prospects.

The Conference Board, a private industry group, said its index of consumer attitudes rose to 68.1 from a revised 61.9 the previous month. Economists polled by Reuters had expected a reading of 60.8.

Still, there appears to be a growing risk that weakness in the labor market and broader economy could dial down the housing recovery's strength. Hiring slowed dramatically in March and economic growth was lackluster in the first quarter, raising fears the economy could struggle to cope with Washington's austerity drive.

Business activity in the U.S. Midwest unexpectedly contracted in April to its lowest level since September 2009 as a gauge of employment pulled back, another report showed.

The Institute for Supply Management-Chicago business barometer fell to 49, below the 50 mark that denotes contraction and falling short of economists' expectations for 52.5.

Other recent data has pointed to less steam building in the housing market, and the Commerce Department said on Tuesday that the U.S. home ownership rate slipped to 65.2 percent in the first quarter, a 17-year low.

Still, rising home prices could give construction firms more incentive to build new homes and increase inventories. A dearth of homes on the market has held back sales.

The S&P/Case Shiller index showed prices gained 1.2 percent in February on a seasonally adjusted basis from January, topping forecasts for a 0.9 percent gain.

Following a spectacular collapse that fueled the 2007-09 recession, the housing sector appears to have turned a corner and prices have been rising since February 2012.

MORE MONETARY STIMULUS AHEAD

U.S. stocks were about flat, although market players said the drop in Midwestern business activity weighed on sentiment. Yields on U.S. government debt were also little changed.

The data came as the Federal Reserve prepared to open a two-day meeting on monetary policy. A recent slew of weak U.S. growth data has raised expectations the Fed will keep its pace of bond buying at $85 billion a month throughout the year.

The Fed has kept overnight interest rates near zero since late 2008 and it has tripled its balance sheet to about $3 trillion through purchases of securities, which are aimed at pushing longer-term borrowing costs lower.

A separate report showed U.S. labor costs rose a modest 0.3 percent in the first quarter, pointing to a lack of inflationary pressures that could give the Fed space to continue its monetary stimulus.

Wages and salaries, which account for 70 percent of employment costs, increased 0.5 percent in the first quarter, and were up 1.6 percent in the 12 months through March, according to the report from the Labor Department.

Workers' benefits rose 0.1 percent during the quarter, the slowest pace since 1999. The data may have been distorted by an error found in benefits data for sales and office workers, but the department said the data error probably did not have a major impact.

(Reporting by Jason Lange in Washington and Leah Schnurr in New York; Editing by Neil Stempleman and Chizu Nomiyama)

Opinion: Financial Collapse: A 10-Step Recovery Plan

Evidence of this forgetting is everywhere. The public has lost interest in the causes of the crisis; many, of course, are just struggling to get by. Unrepentant financiers whine about “excessive” regulation and pay lobbyists to battle every step toward reform. Conservatives bemoan “big government” and yearn to return to laissez-faire deregulation. Higher international standards for bank capital and liquidity have been delayed. I could go on.

Instead, let me try to encapsulate what we must remember about the financial crisis into 10 financial commandments, all of which were brazenly violated in the years leading up to the crisis.

1. Remember That People Forget

Treasury Secretary Timothy F. Geithner lamented last year that before the crisis, “There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up.” He was right. As the renegade economist Hyman Minsky knew, it is normal for speculative markets to go to extremes. A key reason, Minsky believed, is that, unlike elephants, people forget. When the good times roll, investors expect them to roll indefinitely. When bubbles burst, they are always surprised.

2. Do Not Rely on Self-Regulation

Self-regulation of financial markets is a cruel oxymoron. We need zookeepers to watch over the animals. The government must not outsource this function to “market discipline” (another oxymoron) or to for-profit companies like credit-rating agencies. The Dodd-Frank Act of 2010 isn’t perfect, but it has the potential to change regulation for the better. But most of its reforms are still being phased in, and as the rules are being drafted, the industry (here and abroad) is fighting them tooth and nail and often prevailing.

3. Honor Thy Shareholders

Boards of public corporations are supposed to protect the interests of shareholders, partly by monitoring the behavior of top executives, who are employees, not emperors. In the years before the crisis, too many directors forgot those responsibilities, and both their companies and the broader public suffered from the malign neglect. Will they now remember? Some will — for a while. But sanctions on directors for poor performance are minimal.

4. Elevate Risk Management

One bitter lesson of the crisis is that, when it comes to risk taking, what you don’t know can hurt you. Too many C.E.O.’s let their subordinates ride roughshod over risk managers, tipping the balance toward greed and away from fear. The primary responsibility for keeping risk-management systems up to snuff rests with top executives and boards of directors. But the Federal Reserve and other regulators are now watching and mustn’t let up.

5. Use Less Leverage

Excessive leverage — otherwise known as over-borrowing — was one of the chief foundations of the house of cards that collapsed so violently in 2008. Overpaid investment “geniuses” used leverage to manufacture extraordinary returns out of ordinary investments. Bankers and investors (not to mention home buyers) deluded themselves into thinking they could earn high returns without assuming big risks. But leverage is like alcohol: a little bit has health benefits, but too much can kill you. The banks’ near-death experiences, plus preparation for higher capital requirements to come, are temporarily keeping them sober. But watch for the binge drinking to return.

6. Keep It Simple, Stupid

Modern finance profits from complexity, because befuddled customers are more profitable ones. But do all those fancy financial instruments actually do the economy any good? Paul A. Volcker, the former Fed chairman, once said the A.T.M. was the only beneficial financial innovation in the recent past. He may have exaggerated, but he had a point. Who needs credit default swaps on collateralized debt obligations, and other such concoctions?

7. Standardize Derivatives and Trade Them on Exchanges

Derivatives acquired a bad name in the crisis. But if they are straightforward, transparent, well collateralized, traded in liquid markets by well-capitalized counterparties and sensibly regulated, derivatives can help investors hedge risks. It is the customized, opaque, “over the counter” derivatives that are the most dangerous — and the ones more likely to serve the interests of the dealers than their customers. Dodd-Frank pushed some derivatives toward greater standardization and transparent trading on exchanges, but not enough. The industry is pushing to keep more derivatives trading out of the sunshine.

8. Keep Things on the Balance Sheet

Before the crisis, some banks took important financial activities off their balance sheets to hide how much leverage they had. But the joke was on them. The crisis revealed that some chief executives were only dimly aware of the off-balance-sheet entities their banks held. These “masters of the universe” hadn’t mastered their own books. Dodd-Frank specifies that “capital requirements shall take into account any off-balance-sheet activities of the company.” That’s a welcome step toward making off-balance-sheet entities safe and rare. Now regulators must make the rule work.

9. Fix Perverse Compensation

Offering traders monumental rewards for success, but a mere slap on the wrist for failure, encourages them to take excessive risks. Chief executives and corporate directors should “claw back” pay when putative gains turn into losses. If they don’t, we may need the heavy hand of government to do it.

10. Watch Out for Consumers

The meek won’t inherit their fair share of the earth if they are constantly being fleeced. What we learned in the crisis is that failure to protect unsophisticated consumers from financial predators can undermine the whole economy. That surprising lesson mustn’t be forgotten. The Consumer Financial Protection Bureau should institutionalize it.

Mark Twain is said to have quipped that while history doesn’t repeat itself, it does rhyme. There will be financial crises in the future, and the next one won’t be a carbon copy of the last. Neither, however, will it be so different that these commandments won’t apply. Financial history does rhyme, but we’re already forgetting the meter.

Alan S. Blinder is a professor of economics and public affairs at Princeton, a former vice chairman of the Federal Reserve and the author of “After the Music Stopped: The Financial Crisis, the Response and the Work Ahead.”

News Analysis: In Europe, Focus Begins to Shift to Speed of a Recovery

A year ago, many people seriously doubted whether the euro would still exist by now. On the threshold of 2013, the debate is more about how long it will take for the euro zone economy to recover and what must be changed to avoid future crises.

Europe still has plenty to worry about. Economic output is shrinking in nine of the 17 nations that use the euro. European banks remain weak, and many have yet to confront their problems decisively.

Many businesses in Spain, Italy and other distressed countries cannot obtain credit, hampering a recovery.

On top of that, with national elections coming in Italy in February and Germany in September, leaders there may be more focused on the narrow concerns of their voters than the cause of European unity.

“At the moment the crisis seems to have calmed down somewhat,” Jens Weidmann, president of the Bundesbank, the German central bank, said in an interview with the Frankfurter Allgemeine newspaper published on Sunday. “But the underlying causes have by no means been eliminated.”

But consider some of the doomsday situations that did not occur in 2012. Greece did not leave the euro zone or set off a financial disaster like the one sparked by the collapse of Lehman Brothers. Spanish and Italian bond yields, rather than succumbing to contagion from Greece, retreated from levels that had threatened their governments with bankruptcy. And nowhere did populist, anti-euro political parties gain the upper hand.

All of these things could still happen, but the probability of catastrophe has fallen substantially because of a fundamental change in the way that European leaders are dealing with the crisis.

Under its president, Mario Draghi, the European Central Bank has promised to buy the bonds of countries like Spain, if needed, to control their borrowing costs.

That vow, which cooled the crisis fever of late summer, bought time for elected officials to begin creating the superstructure needed to make the euro more credible, including a permanent fund for rescuing stricken member countries and a unified system for overseeing banks.

“In 2012, the euro area leaders finally got the diagnosis right,” said Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington. “It wasn’t about Greek debt or Irish banks. It was about some very fundamental design flaws that needed to be fixed. That’s what markets were looking for.”

Even though European political leaders seem to argue endlessly, they have made enough progress to keep speculators at bay. Investors surveyed by UBS recently ranked the chances of a breakup of the euro zone well behind the potential danger from a combination of spending cuts and tax increases scheduled to take effect in the United States next month or a hard landing by the Chinese economy.

“There is more of a perception that nobody is better off if this thing breaks up,” said Richard Barwell, senior European economist at Royal Bank of Scotland.

The question in 2013 will be whether a fragile calm in Europe holds long enough for economic growth to resume, for banks to rebuild their balance sheets and for leaders to make progress creating a more durable currency union.

Here are some of the main things to watch:

ECONOMIC PERFORMANCE The euro crisis, arguably, will be over the day that all of the stricken countries are generating economic growth. Ireland, one of the first countries to get into debt trouble back in 2008, might already have turned the corner. Its gross domestic product grew 0.2 percent in the third quarter from the period a year earlier.

Spain, Italy and Portugal are still deep in recession, and Greece is in a de facto depression. But there are some signs of progress in one crucial measure: trade balances. All of the distressed countries have increased exports this year and reduced trade deficits. That is a sign their products have become more competitive on world markets.

Intervention Business Helps Attorney's Own Recovery

The road to recovery for a veteran trial lawyer who confronted his own drinking problem has created an unexpected business opportunity -- leading interventions for families dealing with substance abuse problems.

Steven Varney has been sober since 2006. A little over two years ago, he got interested in the idea of helping families organize surprise showdowns that result in getting drug- or alcohol-addicted loved ones into treatment. Varney's motivation came from facing addiction problems of his own. "I found that in working through my own recovery program, I got enormous satisfaction or fulfillment out of helping other people who are struggling," Varney said.

The season of holiday parties is upon us, when a social drink here or there can materialize into something destructive in the nicest of families. Varney knows all too well how the good times can turn sour. He also knows that alcoholism does not discriminate. "It doesn't matter how many friends you or how much money you have," he said. "Anyone can become addicted."

For the first 25 years of his career, Varney was a profile of success, at least on paper. After majoring in political science as an undergraduate, he graduated from the University of Connecticut School of Law in 1985. His first job was as a litigator with Brown, Paindiris & Scott in Hartford, Conn., where he stayed for 24 years.

During that time, he made partner and handled many high-profile cases, including a lawsuit known as the "Tarmac Hold" case in which a Fairfield, Conn., family sued America West Airlines for being held "captive" on a jet for over eight hours during an airport weather delay. The case eventually settled favorably for his client.

In 2005, Varney left to start his own criminal defense and civil litigation practice, which he expanded to include defense of abuse and neglect charges brought by the Department of Children and Families. After work, Varney coached Little League baseball, soccer and basketball in his community of Rocky Hill, Conn.

While he did a pretty good job of keeping it secret, his alcohol addiction grew worse. "I was on top of the world," he said. "But my world was crumbling around me. I continued to go on functioning, day after day, denying to myself and my loved ones that I had a problem."

DISCIPLINE ISSUES

His own road to recovery was pain-filled to be sure, although Varney hesitates to publicly discuss that path or the impact it had on his own family. He said only that his family held an intervention, which led him to inpatient and outpatient treatment. "I'm living proof that interventions work," he said.

Although he found sobriety, he also found himself in trouble with state disciplinary officials. In 2010, two clients filed grievances against Varney. One alleged violation stemmed from collecting an unreasonable retainer of $5,000 for a routine case. The other was for not adequately communicating with a client. As a result, his law license was suspended for two years.

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British Recovery Plan Threatened by Weak Growth

The Office for National Statistics said government borrowing in October was £8.6 billion, or $13.7 billion, compared with £5.9 billion ($9.4 billion) in October 2011. Corporate tax receipts were down 9.5 percent while spending on social benefits increased 7.7 percent from October 2011.

Although Britain emerged from recession in the third quarter, with a 1 percent increase in economic growth, analysts have cautioned that that was distorted by special factors like the Olympic Games and that the outlook for growth remained feeble.

The figures Wednesday support that thesis, suggesting that the chancellor of the Exchequer, George Osborne, will struggle to hit his target of limiting borrowing for 2012-13 to £120 billion ($191 billion). In the longer term some analysts say they also believe that Britain’s prized AAA credit rating is at risk.

Sam Hill, fixed-income strategist for Britain at RBC Capital Markets, said in a note that borrowing for October had exceeded the consensus expectation of £6 billion ($9.5 billion).

“With data for seven months of the fiscal year now in, the government have borrowed 61 percent of the full year target of £120 billion, about four percentage points higher than trend over the last three years,” he said. “We believe this is consistent with our forecast for an upward revision to the £120 billion borrowing target of £5 billion.”

The lack of clear signs of a return to robust economic growth remains the main concern for most analysts.

“The underlying story of this year is tax receipts coming in weaker than expected,” said Robert Wood, chief economist for Britain at Berenberg Bank in London. “That’s because growth has stalled.”

Mr. Wood said it remained “touch and go” as to whether the government would meet its deficit reduction targets.

“I still think that the credit rating is more likely than not to be downgraded over the next few years,” he added.

The government argued that the figures indicated that it was keeping control of spending.

“The economy is healing, but it still faces many challenges,” said a spokesman for the Treasury, who in line with policy asked not to be identified. “These numbers illustrate that, but also show the government’s plans to bring spending under control are on track for the year.”

The spokesman said that corporate tax receipts were affected by lower-than-expected energy production from the North Sea.

In a separate development, minutes of the last meeting of the monetary policy committee of the Bank of England revealed divisions at the central bank over how to manage a return to growth, with one member calling for more economic stimulus.

David Miles argued that an asset-buying plan, intended to improve growth, could be increased by £25 billion ($40 billion) without stoking inflation. But the committee, which has already pumped £375 billion ($597 billion) into the economy via such quantitative easing, elected not to expand the program.

The panel also discussed reducing the benchmark interest rate from its record low of 0.5 percent, but unanimously voted not to change it.