Western Europe reacts cautiously to latest moves in US economy

As prolonged recession forces political as well as economic changes across the face of Western Europe, officials take some heart from the prospect of lower interest rates in the United States.

Yet Common Market experts in Brussels also see trouble a few months from now if the Reagan administration does not take stronger action to lower its huge budget deficit.

This is the picture in European capitals following the welcomed recent move by the US Federal Reserve to allow temporarily faster growth in the nation's money supply.

The hope in London, Paris, Bonn, Rome, the Hague, Madrid, and the Benelux countries is that US interest rates will continue to fall in coming weeks, and that the leading economy in the West will gather momentum again.

Yet the picture ahead is mixed - and the political results of prolonged recession are already evident. European voters are everywhere seeking confidence born of strong government action against unemployment and deficit spending.

In the past year both left- and right-wing governments have suffered - ones to the right of the political spectrum in France, Norway, Greece, Sweden, and perhaps soon in Spain, and ones to the left in West Germany, Denmark, and Belgium. The Irish government has also changed hands.

Analysts in London say European voters have been hard on those governments in power immediately after the second round of oil price hikes in 1979.

''In the short term, the new US Federal Reserve policy on the money supply is what we've been waiting for,'' says a European Community official in Brussels. ''We in Europe have been suffering badly because of high US interest rates.''

But the official was worried about the outlook after the next few weeks.

''If the US economy does pick up, and Washington's budget deficit remains high,'' he says, ''interest rates could rebound upward. The government will have to keep on borrowing money to cover its deficit. Consumers will be borrowing more. Interest rates will have to rise again. . . .''

The European economic malaise in the 1970s saw Sweden, Italy, Belgium, Denmark, and Ireland with government deficits ballooning out of control.

The West German case is less dire. Exports have been strong and inflation relatively low, though unemployment now is rising sharply.

The government of Chancellor Helmut Kohl has angered trade unions with its emergency economic program to freeze wages for six months. But Mr. Kohl has also said the government would try to create jobs by assisting public and private investment and giving a fresh impetus to the housing industry. West Germany will also increase borrowing for 1982, while its spending cuts will be less than planned. Cuts may deepen after the proposed March 6 election.

In France, the Socialist government of Francois Mitterrand now is moving away from spending its way out of recession and is trying out an austerity package instead.

In Belgium, the center-right has been in power under Wilfred Martens since last December. It in turn has just been set back by a swing against it in local elections. The main beneficiary is the opposition Socialists, and new pressure is now on the government to relax its stringent economic policies.

The new Social Democratic government of Olof Palme in Sweden has upset its Nordic neighbors by devaluing its currency a full 16 percent. It has frozen prices indefinitely.

Norway attacked the devaluation as a Swedish effort to export its economic woes. Oslo refused to devlaue its currency, but was expected to announce measures to protect its own competitiveness.

Finland was forced into the second devaluation of its markka in less than a week.

In Britain, Prime Minister Margaret Thatcher refuses to be deflected from her monetarist course. While the opposition Labour Party is in disarray and the Social Democrats are as yet unproven, British voters appear to be impressed by Mrs. Thatcher's air of complete certainty on the economic front.