Europe Set For Deep Recession, Economists Warn

Source : http://www.telegraph.co.uk

Europe's economy is facing its worst recession in at least two decades, economists warned today, after figures showed that the region's economy contracted 1.5pc in the final three months of last year.

The Eurozone economy, whose biggest members are Germany and France, shrank 1.5pc in the fourth quarter compared with the third quarter - a steeper fall than economists had expected. Germany had the worst fall, with the economy shrinking the most since the country was reunified in 1990.

Many of Europe's other economies fared little better during a quarter in which the collapse of Lehman Brothers deepened the financial crisis and helped tip countries into recession. France shrank 1.2pc; Italy was was down 1.2pc and Spain weakened 1pc.

The news will heap pressure on the European Cental Bank to cut interest rates in March after holding them at 2pc earlier this this month. The ECB has been attacked by economists for not moving as quickly as the Federal Reserve in America and the Bank of England to tackle the downturn.

The eurozone economy will contract 2.3pc this year, according to Howard Archer of Global Insight, as the "global recession, extended tight credit conditions and financial sector problems" take their toll.

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