Europe teeters on the brink of recession

Grainne Gilmore
London Times
Thursday, Aug 14, 2008

Europe today edged closer to recession for the first time since the single currency was introduced in 1999, after the economy shrank by 0.2 per cent during the second quarter.

Output in the 15-nation eurozone during the three months to June fell from a 0.7 per cent increase in the first quarter. Overall, annual growth in Europe slowed from 2.1 per cent to 1.5 per cent.

It also emerged that European inflation remained at a record high of 4 per cent in July.

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Last month’s inflation figure was revised down from an initial estimate of 4.1 per cent, but remains at double the European Central Bank’s target of close to 2 per cent.

Eurozone GDP was dragged down by the three biggest economies, Germany, France and Italy, which all contracted in the second quarter.

If GDP shrinks again between July and September, it will mean that Europe is in a recession. The technical definition of a full-blown slowdown is two consecutive quarters of contraction.

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