Eurozone enters recession

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The Eurozone has entered recession, official figures confirmed today.

Output across the 15-nation area fell 0.2 per cent between July and September, according to statistics body Eurostat.

This followed a 0.2 per cent decline in the second quarter of 2008 and represents two successive quarters of economic contraction - the technical definition of recession.

The gloomy figures cap a week of dire news, with major UK companies such as Vodafone, BT and Virgin Media announcing thousands of job cuts.

The Bank of England said on Wednesday the UK was very likely to already be in recession after output fell 0.5 per cent between July and September, although this would not be confirmed until January.

Germany - Europe's biggest economy - officially went into recession yesterday, and Italy followed today.

But France narrowly avoided falling into recession after its economy unexpectedly grew by 0.1 per cent in the third quarter following a contraction in the second.

The slowdown in European economies follows the onset of the credit crunch more than a year ago and has been deepened by the crisis in the global financial system during September and October.

ING Bank economist Martin van Vliet said: "Now that the recession has been confirmed, the debate will concentrate on its length and severity.

"Historically, recessions preceded by episodes of banking-related financial stress have tended to be more profound and long-lasting."

But he added that the actions taken by central banks and Governments would hopefully "pave the way for a gradual recovery" in the second half of 2009.

The euro area includes Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia and Finland.

The wider 27-country eurozone - including the UK and a host of Eastern European countries which joined the European Union in 2004 - also declined by 0.2 per cent between July and September, but is not yet officially in recession because of flat growth in the second quarter.