Recession risk grows as Euro GDP contracts
ECONOMISTS fear the Eurozone is heading for a recession after figures out yesterday showed GDP fell in the final quarter of 2011.
Output shrank by 0.3 per cent in the three-month period, Eurostat estimates showed, with France the only major economy to expand.
German GDP declined by 0.2 per cent, Spain’s by 0.3 per cent and Italy’s by 0.7 per cent, taking it back into recession. GDP in the full EU also declined by 0.3 per cent, with the British economy contracting by an estimated 0.2 per cent.
The strongest performers were Latvia and Slovakia, with growth of 0.8 per cent and 0.9 per cent respectively.
“Despite some recent improved Eurozone surveys and evidence that Germany is returning to growth, we doubt that the Eurozone will be able to avoid further contraction,” said IHS Global Insight’s Howard Archer.
“It faces tighter credit conditions, a further tightening in fiscal policy in many countries, the ongoing pressures facing consumers and limited global growth.”
Italian PM Mario Monti yesterday abandoned the country’s bid for the 2020 Olympic games, as well as slashing defence spending, as he battled to cut the country’s budget deficit.
He also accused France and Germany of being responsible for creating the current sovereign debt crisis, as they broke the Stability and Growth Pact with large deficits in 2003, opening the way for others to do the same.