The eurozone is now officially in recession, mainly due to a slump in Germany, Europe's biggest economy, and Italy, while France has narrowly escaped the same fate.
The economy of the 15 countries using the euro shrank by 0.2% between July and September compared with the previous quarter, according to figures from the European Union's statistics office, Eurostat, following a 0.2% contraction in the second quarter.
Two or more consecutive quarters of contraction are regarded as a recession. The situation was worse this side of the Channel in the third quarter.
Britain, which contracted by 0.5% between July and September, will suffer a deep recession from which it will not emerge until the end of next year, the Bank of England warned this week. It now expects the UK economy to shrink by 2% in the first half of 2009.
European car sales fell for the sixth month running, by 14.5% last month, a separate report showed today. Demand for cars has fallen dramatically as the global financial crisis deepens. The eurozone's downturn was caused by recessions in Germany and Italy, its third-biggest economy.
The second-biggest, France, surprisingly bucked the gloomy trend and showed 0.1% growth between July and September. This morning Christine Lagarde, France's finance minister, could not wait to spread the good news and released the French GDP figure on the radio, hours before the Eurostat numbers came out. "It's a surprising figure.
Everyone was expecting a negative number and was preparing to argue about a recession, because a recession is technically two consecutive quarters of decline. Well, in France, contrary to Germany which shrank 0.5% and Britain which shrank 0.5%, France grew by 0.14%," said Lagarde.
Spain, the fourth-biggest eurozone economy, shrank by 0.2% in the third quarter, putting it on course for recession, with another contraction expected in the fourth quarter. The figures bring annual growth in the eurozone down to 0.7% - half that of three months ago - according to Eurostat.
The sharp downturn has reduced demand for oil, thereby pushing inflation lower. Eurostat reported that inflation in the eurozone was zero on a monthly basis in October, with the annual rate slowing to 3.2% from 3.6% in September. Economists warned that Europe would continue to suffer for several more quarters as the downturn bites.
"We expect eurozone GDP to grow by just 1% overall in 2008 and then to contract by 0.5% in 2009 as it is hit by sharply weaker global growth, extended financial sector problems, rising unemployment and very weak business and consumer confidence," warned Howard Archer of Global Insight.
"Given these factors, it will take time for sharply lower oil prices, the retreat of the euro, lower interest rates and fiscal stimulus in a number of countries to generate recovery."
theguardian.com
The economy of the 15 countries using the euro shrank by 0.2% between July and September compared with the previous quarter, according to figures from the European Union's statistics office, Eurostat, following a 0.2% contraction in the second quarter.
Two or more consecutive quarters of contraction are regarded as a recession. The situation was worse this side of the Channel in the third quarter.
Britain, which contracted by 0.5% between July and September, will suffer a deep recession from which it will not emerge until the end of next year, the Bank of England warned this week. It now expects the UK economy to shrink by 2% in the first half of 2009.
European car sales fell for the sixth month running, by 14.5% last month, a separate report showed today. Demand for cars has fallen dramatically as the global financial crisis deepens. The eurozone's downturn was caused by recessions in Germany and Italy, its third-biggest economy.
The second-biggest, France, surprisingly bucked the gloomy trend and showed 0.1% growth between July and September. This morning Christine Lagarde, France's finance minister, could not wait to spread the good news and released the French GDP figure on the radio, hours before the Eurostat numbers came out. "It's a surprising figure.
Everyone was expecting a negative number and was preparing to argue about a recession, because a recession is technically two consecutive quarters of decline. Well, in France, contrary to Germany which shrank 0.5% and Britain which shrank 0.5%, France grew by 0.14%," said Lagarde.
Spain, the fourth-biggest eurozone economy, shrank by 0.2% in the third quarter, putting it on course for recession, with another contraction expected in the fourth quarter. The figures bring annual growth in the eurozone down to 0.7% - half that of three months ago - according to Eurostat.
The sharp downturn has reduced demand for oil, thereby pushing inflation lower. Eurostat reported that inflation in the eurozone was zero on a monthly basis in October, with the annual rate slowing to 3.2% from 3.6% in September. Economists warned that Europe would continue to suffer for several more quarters as the downturn bites.
"We expect eurozone GDP to grow by just 1% overall in 2008 and then to contract by 0.5% in 2009 as it is hit by sharply weaker global growth, extended financial sector problems, rising unemployment and very weak business and consumer confidence," warned Howard Archer of Global Insight.
"Given these factors, it will take time for sharply lower oil prices, the retreat of the euro, lower interest rates and fiscal stimulus in a number of countries to generate recovery."
theguardian.com
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