Double-dip threat to eurozone

 

The embattled eurozone was on the brink of a double-dip recession today as figures revealed that the 17-nation economy shrank by 0.2% between April and June.

The UK's biggest trading partner suffered the decline in output as the debt crisis sweeping the continent escalated, with borrowing costs in struggling countries such as Spain and Italy remaining high.

But the eurozone performance still puts the UK in the shade after figures last month revealed that Britain's economy shrank by 0.7% in the same period.

This compares poorly with the likes of Germany and France, which saw better-than-expected gross domestic product growth of 0.3% and zero respectively.

ING Bank analyst Martin van Vliet said: "Leading indicators suggest there is a fair chance that the eurozone economy might contract further in the third quarter and hence enter a technical recession."

A breakdown of the figures reveals severe declines in output, with Belgium suffering a 0.6% decline in GDP, Italy contracting by 0.7% and Portugal's economy shrinking by 1.2%.

The Netherlands and Austria both saw growth of 0.2%, while the whole of Europe, including non-euro countries, declined by 0.2%.

The figures compare with 0.4% growth in the US and 0.3% growth in Japan.

But the single currency strengthened against most major currencies on the back of the better-than-expected performance from Germany and France.

Mr van Vliet said: "The country breakdown tells a tale of two regions. Northern eurozone economies are still defying technical recession, while southern Europe remains mired in recession."

The UK found itself in the longest double-dip recession since the 1950s when official figures revealed that the economy had contracted for the third consecutive quarter between April and June.

The biggest quarterly decline in three years was driven by a dire construction and manufacturing performance, as well as one-off factors such as the additional bank holiday for the Queen's Diamond Jubilee.

Meanwhile, the UK's trade deficit widened to a record level in June as exports plunged to the eurozone and across the world.

The goods and services deficit - the gap between imports and exports - rose to £4.3 billion from £2.7 billion in May, the highest level since comparable records began in 1997, as exports of traded goods to EU countries fell by 7.2% month on month.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Home Care / Support Workers

£7 - £10 per hour: Recruitment Genius: This care provider is looking for Home ...

Recruitment Genius: Web Team Leader

£30000 - £35000 per annum: Recruitment Genius: One of the UK's leading web des...

Recruitment Genius: Client Manager

£27000 - £35000 per annum: Recruitment Genius: A growing, successful, friendly...

Recruitment Genius: Property Negotiator - OTE £20,000+

£16000 - £25000 per annum: Recruitment Genius: This family owned, independent ...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate