Rotten to the Core: EU Plunges Deepe...

Rotten to the Core: EU Plunges Deeper into Recession

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“animis opibusque parati”

Since: Oct 12

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#1 May 15, 2013
'Rotten to the core' eurozone drags Britain down as countries plunge deeper into recession

EUROPE has been thrown further into crisis today, as the recession hitting the economies of the 17 eurozone nations dragged into its sixth quarter.

By: Charlotte Meredith, Daily Express [UK]

Slow-growth-is-plaguing-many-E uropean-countries

Eurostat, the EU's statistics office, said today that nine of the 17 eurozone countries are in recession, with France shockingly being a bleak addition to the list.

Overall, the eurozone economy contracted 0.2 percent in the January-March period from the previous quarter.

Although it is an improvement on the previous quarter's 0.6 percent decline, it is another unwelcome landmark for the single currency bloc.

This recession, though not as deep as the one in 2008, is the longest in the history of the euro, which was launched in 1999.

There was also bad news for the wider 27-country EU, which is also now officially in recession.

In the first three months of 2013, its economic output shrank 0.1 percent, following a 0.5 percent decline in the previous quarter.

The eurozone has been shrinking since the fourth quarter of 2011 when initially it was just the countries at the forefront of its debt crisis, such as Greece and Portugal that were contracting.

But the malaise is now afflicting the so-called core.

Figures earlier today showed Germany, Europe's biggest economy, grew by a less-than-anticipated quarterly rate of 0.1 percent, largely because of a severe winter.

However, Germany's paltry growth still allowed it to avoid a recession following the previous quarter's 0.7 percent fall.

France, Europe's second-largest economy, has not avoided that fate, with figures showing that it contracted by a quarterly rate of 0.2 percent for the second quarter running.

A recession in France, the eurozone's second-largest economy, is likely to exacerbate problems around the region since it is a major market for its neighbors.

We are in Europe, the eurozone countries are our main clients and our main suppliers, and when the environment around us is depressed, well, that's the main factor in the slowing of the French economy," French finance minister Pierre Moscovici said.

This marks the third time that France has been in recession since 2008, when a banking crisis pushed the global economy into its deepest contraction since World War II.

Hector McNeil, CEO of the Exchange Traded Products provider, Boost ETP, commented that the gloomy statistics show that the "eurozone's core is now as rotten as the periphery."

"Even German growth has slipped to negligible levels and France's economy is wilting faster than President Hollande's re-election prospects," Mr McNeil said.

"Formerly resilient export-driven economies like the Netherlands have been hit hard by falling demand from China and stagnant consumption at home.

Consistently negative PMI numbers suggest that more pain lies ahead, the financial expert said, adding that with eurozone growth sinking and unemployment at a record high, "the clamour for an end to austerity is turning into a cacophony."

"Rates of default among borrowers in several eurozone countries are increasing, exposing banks to a growing risk of contagion. What began as a banking crisis and morphed into an economic crisis could easily turn back into a banking crisis," he said.

“animis opibusque parati”

Since: Oct 12

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#2 May 15, 2013

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