Europe has entered a double-dip recession says Eurostat, with the eurozone’s economic output shrinking by a further tenth of one percent after Q2’s 0.2% fall.
It is Europe’s second recession since the global 2009 financial crisis.
Italy and Spain have been contracting for a year already, Greece is in full-blown depression, and France and Germany are not strong enough on their own to tow everyone along.
Hopes of a strong recovery are fading too, with an overall 2012 contraction of 0.4% forecast, and just a tenth of a percent growth next year.
“Of course the economies are influencing each other in a strong way. But the current slowdown is more the result of belt-tightening, especially concerning government spending. That means the fiscal policy is a big speed bump,” says economist at Bank Julius Baer, David Kohl.
The only bright spot for the euozone is inflationary pressure may be easing. Inflation fell to 2.5% in October, down a tenth of a percent since September, breaking a run of stubbornly high rises that was causing concern at the ECB.
Of course, inflation is falling mainly because consumers are thinking twice before digging into their pockets, which does not bode well for sales during the christmas holiday season.