SPAIN confirmed yesterday that it had slipped back into a technical recession during the first three months of the year, kicking off a gloomy start to the week as a slew of downbeat data renewed fears over the single currency area.
Eurozone woes were compounded by figures from crisis-struck Greece, which showed retail sales are plummeting at an increasing rate. Greek retail sales by volume fell 13 per cent year-on-year in February, with the pace of the decline picking up after a revised 10.6 per cent drop in January.
Greece has been joined in recession by the Spanish economy, which shrank by 0.3 per cent in the first three months of the year according to official estimates.
Lending to companies and individuals in the Eurozone also grew less than hoped in March, it was revealed yesterday.
“The wheels are very clearly coming off,” Jefferies economist David Owen said, predicting “a very significant decline” in the next two quarters. “It’s still reasonably easy to envisage GDP to be down about 1.5 per cent this year,” Owen warned.
At the end of last year the European Central Bank pumped €1 trillion of cheap three-year cash into the banking sector in a bid to stave off another credit crunch in the Eurozone. Yet loans to the private sector were up by an annual 0.6 per cent in March, lower than expected – suggesting that the ECB’s measures have not trickled down. Overall money growth accelerated, however, providing some hope for the recovery.