The eurozone has slumped into its longest recession ever, after economic activity across the region fell for the sixth quarter in a row. Economic output across the single currency area fell by 0.2% in the first three months of 2013, statistics body Eurostat reported on Wednesday. France, Spain, Italy and the Netherlands all saw their economies shrink as the economic crisis in the eurozone continued to hit its largest economies. Eurostat's figures showed that the eurozone economy has contracted by 1% over the last year, putting further pressure on leaders as unemployment climbs to new record highs. The 0.2% contraction in the first quarter was an improvement on the 0.6% drop recorded between October and December, but analysts warned that the eurozone's economic outlook is darkening. "What seems incontrovertible, on this evidence, is that the member-states of the euro zone are on the wrong track," commented Stephen Lewis, chief economist at Monument Securities. "The costs of the zone's one-size-fits-all strategy are becoming brutally apparent."
France was dragged back into recession by a 0.2% drop in GDP, announced on the first anniversary of François Hollande being sworn in as president. Pierre Moscovici, French finance minister, denied Paris's forecast of 0.1% growth this year was too optimistic. "I'm sticking to the figures," Moscovici told reporters, adding that the EU must prioritise growth over tackling budget deficits.
There was also disappointment that Germany eked out growth of just 0.1%, worse than economists had expected. The Dutch economy shrank by 0.1%. "The bottom line is that both the German and French economies, which together account for half of the eurozone's output, are in the doldrums," said Nick Spiro of Spiro Sovereign Strategy. "Add in the persistent recession in the Netherlands, which accounts for a further 6.5% of eurozone GDP, and the core and semi-core of the eurozone are in significantly worse shape than a year ago."
Italy's new prime minister, Enrico Letta, was given an early reminder of the challenge he faces with the news that Italian GDP fell by 0.5%. Italy's economy has been shrinking for the last seven quarters, its longest recession since at least 1970.
Beyond the eurozone, the Czech Republic suffered a 0.8% decline in GDP during the quarter. The data came a day after the Washington-based Pew Research Centre reported that public support for the European Union had fallen over the last year, from 60% to 45%. Pew warned that the ongoing financial crisis means the European project was "in disrepute" in some countries, with many Europeans losing faith in closer integration. "These results spell trouble ahead for the EU," said Lewis."They are likely to be taken seriously in Washington."
Eurostat's figures also showed that the European Union shrank by 0.1% during the last quarter, despite the UK growing by 0.3%.
Figures released last week showed that Spain's economy contracted by 0.5%.
11 comments:
Whereas in France there has been austerity, in the form of tax rises. It is tax return time and my wife is just doing her declaration for 2012, despite a 150 euro / month pay rise for promotion she is 60 euros poorer for the year as a whole due to social security increases. We may be even worse off with tax rises.
She's not one of Hollande's detested rich but a civil servant on a fairly modest income. Other people are in a worse position. Unemployment is rising at around 120,000 per month too. That means less spending in the economy.
uch of Europe is in a depression, not recession. This has been going on for years. Dip, some improvement. Dip, some improvement. The Great Depression had similar ups and downs, and this period is actually longer for parts of Europe than that. Not as deep for the most part, but still a depression.
Recession, recession, recession. FFS, its NOT a recession its a DEPRESSION so politicians and press stop using an wholly inapropriate and irrelevant word to describe the current European economic situation please. Its dull, its boring and if you think us European phlebs will believe your twaddle about trip dip et al you must be acutely more stupid than Gideon looks/acts/IS
No way the EU will get out of this recession with the prescription imposed by Germany. EU needs stimulus for growth while eliminating some welfare and other expenses.
The policies being perused by Hollande’s socialist government in France are the same tax, ,borrow and spend policies promised by Ed Miliband and Ed Balls. The news today from across the channel proves it’s not working
'll all come good in the end.....honest.
Workers will have to beg for jobs, for decent wages, and for fair conditions. Most will be unsuccessful in at least one of these elements of a working life.
What more could right-wing free-market fanatics want.
Those who believe in free-market economics believe that banks should be able to go under and fail.
The EU, masters of the bailout, do not follow this doctrine and force the people to bail out the banks.
Labour shadow foreign secretary Douglas Alexander claimed the vote was "a further devastating blow to the prime minister's authority."
He said:
It demonstrates that David Cameron has managed to turn a Europe issue into a leadership issue. This is a prime minister who has lost control of the agenda and tonight lost control of his party.
David Cameron's backbenchers have shown they simply won't give up until he gives in.
The real risk is that he spends the coming month trying to get his party back in line, instead of focusing on getting our economy back on track.
There were gasps in the Commons as the number of MPs to vote for Baron's amendment was announced, PA reports.
There had been reports during the day that the number of MPs prepared to vote for the amendment had dropped off after the promise to introduce a draft EU referendum Bill following tomorrow's Private Members' Ballot.
Baron had pledged to stick with his amendment despite being unable to get 100 MPs to sign it. But in the end far more than 100 voted in favour of the amendment.
Despite Cameron offering the concession of a free vote to backbenchers and government aides, the backbench rebellion is likely to be seen as the most significant October 2011 when 111 MPs, around 80 of them Conservative, revolted over Europe in a bid to exert pressure for an in/out referendum.
Evening summary
• More than 100 Tories seem to have voted for an amendment calling for an EU referendum bill. The exact figures should be in soon, but it seems inevitable that the total will be larger than the 81 Tories who voted for a referendum in a key vote in October 2011. Technically this is not a rebellion. But it looks and feels like one, because - as loyalists like Nick Soames have pointed out - by voting for the amendment Tories were implying that they did not trust David Cameron to deliver a referendum.
• Cameron has criticised Nick Clegg and Ed Miliband over Europe, saying they are sticking their heads in the sand by claiming Britain should accept everything that emerges from the EU.
• Cameron has rejected a suggestion from Nadine Dorries that she should be allowed to stand on a joint Conservative/Ukip ticket at the next election. (See 6.49pm)
• Lord Lawson, the Conservative former chancellor, has told peers that he does not think Cameron will be able to achieve the substantial EU renegotiation he hopes to achieve.
I do not believe it will be possible for the prime minister to secure the fundamental changes that he seeks. It will certainly not be possible if it is thought that at the end of the day he will follow in the footsteps of his predecessor Harold Wilson and recommend an In vote, however inconsequential his renegotiation proves to be.
I've got to go now, but a colleague will be topping up the blog as the full voting figures, including the division lists, come in.
In a symbolic expression of deep unease with the Coalition’s European policy, around 114 Conservative MPs, including ministerial aides, backed an amendment regretting the omission of a referendum law.
Conservative support for the motion was bigger than expected and equal to more than a third of all the party’s MPs.
Labour and the Liberal Democrats opposed the referendum call, and the amendment was defeated by 272 votes to 130.
The vote is believed to be the first time since 1946 that members of a governing party have voted against a Queen’s Speech, and reflects deep Conservative unhappiness over Mr Cameron’s Coalition deal with the Liberal Democrats.
The embarrassing show of Tory defiance came despite Mr Cameron’s last-minute attempts to placate his party over Europe. Earlier this week he rushed the publication of a draft referendum bill and encouraged backbenchers to introduce it to Parliament.
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