Leaders face falling GDP

Tim Wallace
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VE o

VE of  weak data in the Eurozone points towards a recession, analysts are warning, piling more pressure on Eurozone leaders.

Figures out yesterday from the European Commission showed consumer and business confidence worsening into October.

Economic sentiment slipped to a 22-month low, falling 0.2 points to 94.8. Consumer confidence declined 0.8 points to -19.9 on September’s figures.

“The evidence suggests Italy and Spain are in recession, and the Eurozone as a whole could shrink this quarter,” said Lombard Street Research’s Jamie Dannhauser.

Economists stress immediate pressure is on Berlusconi to reform Italy’s finances. He needs to avoid a default, overwhelming the bailout fund.

Markets have priced in a 0.25 per cent rate cut in December, though some analysts hope it happens sooner.

Germany recorded no inflation this month, upping the chance of a cut.

Markets hope incoming European Central Bank (ECB) boss Mario Draghi will cut interest rates next week.