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Eurozone falls back into
recession
15 November 2012
Last updated
at 12:42
The eurozone has returned to
recession as the region's debt
crisis continues to hurt
demand, figures show.
The economy of the 17-nation
bloc contracted by 0.1% between
July and September, after
shrinking 0.2% in the previous
three months, Eurostat said.
The eurozone was last in recession
in 2009, when the economy
contracted for five consecutive
quarters.
The news comes a day after
millions of workers in Europe held
a day of action against austerity
measures.
Protests in Spain, Italy and
Portugal were marred by violence.
Countries such as Greece and the
Republic of Ireland that have been
bailed out by international lenders
continue to see their economies
shrink. Meanwhile larger
economies such as Spain have
imposed spending cuts in an
attempt to avoid having to ask for
a bailout.
"This [the fall into recession] was
totally expected because of
austerity policies combined with
world growth slowing down and a
dramatic fall in activity in
Germany and the Netherlands,"
said Steen Jakobsen, chief
economist at Saxo Bank.
"The last couple of days have
created a new momentum for a
major change in policy input,
because up until this week, social
tension was not part of equation.
It seems like the tone has shifted
dramatically."
'Dangerous situation'
The austerity measures in many
countries - mostly in southern
Europe - have combined tax rises
with cuts in salaries, pensions,
benefits and social services.
"We are now getting into a double
dip recession which is entirely
self-made," said Paul de Grauwe, a
professor at the London School of
Economics. "It is a result of
excessive austerity in southern
countries and unwillingness in the
north to do anything else.
"This divide, even hostility,
between countries is stronger than
I have seen in the last 20 years.
The degree of austerity has now
put so many people in terrible
conditions that they reject all of
this. That's a very dangerous
situation."
Many European countries are
suffering from high unemployment
and shrinking economies
Figures released in the past week
show that the Spanish economy
contracted by 0.3% between June
and September and Portugal by
0.8%.
French gross domestic product
rose by 0.2% in the third quarter
compared with the previous three
months. But the previous quarter
was revised down to -0.1% from
zero, according to French
statistics agency Insee said
Thursday.
The production of goods and
services in France, Europe's
second-largest economy, increased
"after five quarters of near
stagnation", it said.
Greece said on Monday that its
economy had contracted by 7.2%
in the third quarter compared
with a year earlier. It did not give
a comparison with the preceding
three months.
The economy of the Netherlands
shrank 1.1%, adding to signs that
the previously-healthy north of
Europe is suffering as the southern
parts push through more austerity
cuts in weak economies.
For the whole of the European
Union, which includes countries
such as the UK and Sweden, the
economy grew by 0.2% in the
quarter, after having contracted
0.2% in the previous three
months.
The UK economy grew by 1% in
the third quarter of the year,
helped by one-off factors such as
the Olympic Games. The eurozone
is the UK's biggest trading partner
and the decline in the bloc's
fortunes helped push the UK back
into recession earlier this year.
In the US, the economy grew by
0.5% in the quarter.
Export demand
The eurozone's largest economy,
Germany, is still expanding,
although growth has been affected
by the debt crisis.
Germany's economy grew by 0.2%
in the July-to-September period,
down from growth of 0.3%
recorded in the previous quarter
and the 0.5% figure seen in the
first three months of this year.
The country's growth was driven
mainly by "foreign demand",
federal statistics office agency
Destatis said.
Last month, the German
government cut its forecast for
economic growth in 2013 from
1.6% to 1%, blaming the
reduction on the eurozone crisis
and weaker growth in emerging
nations in Asia and Latin America.
Germany's gross domestic product
(GDP) grew by 4.2% in 2010 and
3% in 2011.
"The negative data seen in recent
weeks and months could very well
lead to negative growth" in
Germany in the fourth quarter of
the year, said analysts at Natixis
Bank.
Unlike most of its partners in the
17-nation eurozone, Germany has
mainly escaped the worst effects
of the crisis that has threatened to
unravel the bloc.
Until now, it has benefited from
the weaker euro, making its
exports more competitive outside
the eurozone.
However, German consumers are
still spending. "Consumption by
both private households and
government was higher than in the
second quarter when adjusted for
price, seasonal and calendar
variations," Destatis said.
http://m.bbc.co.uk/news/business-20337245
recession
15 November 2012
Last updated
at 12:42
The eurozone has returned to
recession as the region's debt
crisis continues to hurt
demand, figures show.
The economy of the 17-nation
bloc contracted by 0.1% between
July and September, after
shrinking 0.2% in the previous
three months, Eurostat said.
The eurozone was last in recession
in 2009, when the economy
contracted for five consecutive
quarters.
The news comes a day after
millions of workers in Europe held
a day of action against austerity
measures.
Protests in Spain, Italy and
Portugal were marred by violence.
Countries such as Greece and the
Republic of Ireland that have been
bailed out by international lenders
continue to see their economies
shrink. Meanwhile larger
economies such as Spain have
imposed spending cuts in an
attempt to avoid having to ask for
a bailout.
"This [the fall into recession] was
totally expected because of
austerity policies combined with
world growth slowing down and a
dramatic fall in activity in
Germany and the Netherlands,"
said Steen Jakobsen, chief
economist at Saxo Bank.
"The last couple of days have
created a new momentum for a
major change in policy input,
because up until this week, social
tension was not part of equation.
It seems like the tone has shifted
dramatically."
'Dangerous situation'
The austerity measures in many
countries - mostly in southern
Europe - have combined tax rises
with cuts in salaries, pensions,
benefits and social services.
"We are now getting into a double
dip recession which is entirely
self-made," said Paul de Grauwe, a
professor at the London School of
Economics. "It is a result of
excessive austerity in southern
countries and unwillingness in the
north to do anything else.
"This divide, even hostility,
between countries is stronger than
I have seen in the last 20 years.
The degree of austerity has now
put so many people in terrible
conditions that they reject all of
this. That's a very dangerous
situation."
Many European countries are
suffering from high unemployment
and shrinking economies
Figures released in the past week
show that the Spanish economy
contracted by 0.3% between June
and September and Portugal by
0.8%.
French gross domestic product
rose by 0.2% in the third quarter
compared with the previous three
months. But the previous quarter
was revised down to -0.1% from
zero, according to French
statistics agency Insee said
Thursday.
The production of goods and
services in France, Europe's
second-largest economy, increased
"after five quarters of near
stagnation", it said.
Greece said on Monday that its
economy had contracted by 7.2%
in the third quarter compared
with a year earlier. It did not give
a comparison with the preceding
three months.
The economy of the Netherlands
shrank 1.1%, adding to signs that
the previously-healthy north of
Europe is suffering as the southern
parts push through more austerity
cuts in weak economies.
For the whole of the European
Union, which includes countries
such as the UK and Sweden, the
economy grew by 0.2% in the
quarter, after having contracted
0.2% in the previous three
months.
The UK economy grew by 1% in
the third quarter of the year,
helped by one-off factors such as
the Olympic Games. The eurozone
is the UK's biggest trading partner
and the decline in the bloc's
fortunes helped push the UK back
into recession earlier this year.
In the US, the economy grew by
0.5% in the quarter.
Export demand
The eurozone's largest economy,
Germany, is still expanding,
although growth has been affected
by the debt crisis.
Germany's economy grew by 0.2%
in the July-to-September period,
down from growth of 0.3%
recorded in the previous quarter
and the 0.5% figure seen in the
first three months of this year.
The country's growth was driven
mainly by "foreign demand",
federal statistics office agency
Destatis said.
Last month, the German
government cut its forecast for
economic growth in 2013 from
1.6% to 1%, blaming the
reduction on the eurozone crisis
and weaker growth in emerging
nations in Asia and Latin America.
Germany's gross domestic product
(GDP) grew by 4.2% in 2010 and
3% in 2011.
"The negative data seen in recent
weeks and months could very well
lead to negative growth" in
Germany in the fourth quarter of
the year, said analysts at Natixis
Bank.
Unlike most of its partners in the
17-nation eurozone, Germany has
mainly escaped the worst effects
of the crisis that has threatened to
unravel the bloc.
Until now, it has benefited from
the weaker euro, making its
exports more competitive outside
the eurozone.
However, German consumers are
still spending. "Consumption by
both private households and
government was higher than in the
second quarter when adjusted for
price, seasonal and calendar
variations," Destatis said.
http://m.bbc.co.uk/news/business-20337245
