Europe has fallen into its first recession in 15 years, after the global banking crisis and a decline in exports brought growth to a shuddering halt.
By Amy Wilson 14 November 2008
The Eurozone economy - made up of the 15 countries that use the euro - contracted by 0.2pc in the third quarter and it follows a 0.2pc fall in GDP in the second quarter.
The contraction underlines the escalation of the financial crisis that began in the US sub-prime mortgage market into a full-blown economic downturn. The Organisation for Economic Co-Operation and Development and the International Monetary Fund have both warned in the past two weeks that the US, Europe and Japan will also be in recession next year for the first time since World War II.
“The latest data and survey evidence indicate that the fourth quarter is likely to see a sharper fall in GDP as the financial crisis bites harder,” said Howard Archer, chief economist at Global Insight. The European Central Bank is likely to slash rates from 3.75pc to 2pc by the middle of 2009, according to Mr Archer.
The move would represent a u-turn for the ECB’s policy makers who in July increased rates to combat the threat of inflation. Inflation in the region slowed to 3.2pc in October from 3.6pc in September.
Germany, the biggest economy in Europe, confirmed yesterday it was in recession, with a 0.5pc contraction in GDP. The country has been hard hit because of its position as the world’s largest exporter, as economies around globe slow. The UK and US economies both contracted in the third quarter.
Germany is also home to some of the world’s largest car manufacturers including Volkswagen and BMW, and vehicle sales have dropped off dramatically as cash-strapped consumers make do with older models.
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Europe is in recession after bank meltdown
Europe has fallen into its first recession in 15 years, after the global banking crisis and a decline in exports brought growth to a shuddering halt.
By Amy Wilson
14 November 2008
The Eurozone economy - made up of the 15 countries that use the euro - contracted by 0.2pc in the third quarter and it follows a 0.2pc fall in GDP in the second quarter.
The contraction underlines the escalation of the financial crisis that began in the US sub-prime mortgage market into a full-blown economic downturn. The Organisation for Economic Co-Operation and Development and the International Monetary Fund have both warned in the past two weeks that the US, Europe and Japan will also be in recession next year for the first time since World War II.
“The latest data and survey evidence indicate that the fourth quarter is likely to see a sharper fall in GDP as the financial crisis bites harder,” said Howard Archer, chief economist at Global Insight. The European Central Bank is likely to slash rates from 3.75pc to 2pc by the middle of 2009, according to Mr Archer.
The move would represent a u-turn for the ECB’s policy makers who in July increased rates to combat the threat of inflation. Inflation in the region slowed to 3.2pc in October from 3.6pc in September.
Germany, the biggest economy in Europe, confirmed yesterday it was in recession, with a 0.5pc contraction in GDP. The country has been hard hit because of its position as the world’s largest exporter, as economies around globe slow. The UK and US economies both contracted in the third quarter.
Germany is also home to some of the world’s largest car manufacturers including Volkswagen and BMW, and vehicle sales have dropped off dramatically as cash-strapped consumers make do with older models.
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