The tills will be ringing less loudly this Christmas, according to the Organisation for Economic Cooperation and Development. It is the first international monetary think-tank to declare the eurozone has already tipped into recession.
Deputy Secretary-General Pier Carlo Padoan said:
“We live in very difficult times. I believe we can define this a critical moment. The situation in the euro area is rapidly deteriorating and contagion is spreading. Policy continues to be behind the curve. Not only in the euro area, also in the United States. So we think that swift and decisive action is needed to avoid the worst. But we would also like to say that things can be turned around and the situation could get much better.”
But rating agencies remain to be convinced of that. Moody’s has said all countries within the single currency area are at risk because of the debt crisis. However, it says it believes the euro will survive – a message reinforced by the European Central Bank. The bank’s French board member, Christian Noyer, who is also the governor of the Bank of France, said: “On the question of the possible break-up of the euro area, I think this is totally unreasonable. There is no ‘Plan B’. This is absolutely out of the question – absolutely out of the question.”
Moody’s has added its voice to calls for the ECB to become more systematically involved in shoring up struggling economies.