This morning third-quarter GDP figures for Germany, France and Italy were released. Although none of the countries posted a particularly strong result Germany’s 0.2 per cent growth was in line with economists’ expectations while France’s 0.2 per cent growth and Italy’s 0.2 per cent contraction were better-than-expected.
However, these figures weren’t enough to prevent the 17-nation currency bloc sliding into its second recession for three years.
The Eurozone was last in a recession in 2009. Since then it has fought valiantly to rescue its indebted members and fight against the global economic slowdown, but after economic output contracted by 0.1 per cent in the third quarter of this year (following contraction of 0.2 per cent in the second quarter) the Eurozone is officially in recession once more.
Protestors engaged in the recent anti-austerity demonstrations may feel vindicated by this development as they have long asserted that the harsh fiscal measures put in place by governments to combat the crisis are the cause of economic contraction.
Paul De Grauwe, an economist with the London School of Economics, clearly agrees with this view. He was quoted as saying: ‘We are now getting into a double dip recession which is entirely self-made. It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else.’
Of course, many policy makers and industry experts see the austerity measures as a necessary evil, an essential way of trimming unsustainable budget deficits.
In light of a series of disappointing economic data releases for the Eurozone expectations of a recovery in 2013 are beginning to dwindle.
The European Commission is now predicting that the Eurozone will contract by 0.4 per cent across the whole of 2012 and asserting that the economy of the 17-nation currency bloc will expand by just 0.1 per cent in 2013.
As of 10:40 pm
The Pound to Euro exchange rate is currently trading at 1.2425
The Pound to US Dollar exchange rate is currently trading at 1.5849
The Pound to Australian Dollar exchange rate is currently trading at 1.5337
The Euro to US Dollar exchange rate is currently trading at 1.2756
The Euro to Pound exchange rate is currently trading at 0.8048
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