THE eurozone economy shrank in the third quarter from April to June by 0.2%, with France having a third consecutive quarter of no growth at all. Even Europe’s biggest economy, Germany, grew by just 0.3%.
In the previous quarter there was zero growth over the seventeen states that use the euro.
The economies of the 27 countries that are in the EU also contracted by 0.2% in the third quarter.
As a sign of the times, Christian Schulz at Berenberg bank, emphasised that ‘Germany has asserted itself thanks to growing exports to countries outside the eurozone.’
Meanwhile, Peugeot in France and GM in Germany face the prospect of plant closures.
Last week, some of Germany’s world-leading companies reported drops in profits. Siemens, the engineering giant is desperate to cut costs while the steel giant Thyssen Krupp announced a cut in working hours.
Figures released on Monday showed that savage deficit-cutting measures helped to smash Greece’s economy by 6.2% year-on-year in the second quarter.
Economists say the slump will deepen as governments scramble to secure extra billions in additional cuts to keep the bailout funds flowing.
Italy’s second quarter data last week showed the economy contracted by 0.7% quarter-on-quarter, compounding the difficulties for the unelected technocrat Mario Monti and his government as it tries to avoid a bailout that would signal the end of the euro.
Spain’s economy shrank 0.4% over the same period, pushing it deeper into recession, according to figures out two weeks ago.
Among the eurozone’s biggest contractions, Portugal’s GDP shrank 1.2%, Cyprus recorded a 0.8% contraction and Italy was down 0.7%.
‘What we see is a vicious circle of budget cuts, high interest rates in the periphery, and sovereign debt rising,’ said Aline Schuiling at ABN Amro.
Michael Fuchs, Angela Merkel’s deputy parliamentary leader, has put her party’s position. It is that Germany will veto the next Greek aid package if the country proves unable to keep to its reform agenda. He declared that ‘Germany has a right to veto. If we are convinced that Greece is not meeting its obligations, we will make use of that veto.’
Fuchs added that Greece could remain within the European Union even if it left the single currency bloc and restored the drachma.
The perspective is that Greece is to be reduced to beggar status. Fuchs said the EU will set up a ‘sort of Marshall Plan’ to help Athens cope with the reintroduction of the drachma – which will be absolutely worthless.
He rejected the idea of any further European Central Bank (ECB) loans for Greece because it would be a bad example to other countries who would slacken off their austerity measures.
The mounting determination to put Greece out of the euro was reinforced by figures published on Monday which showed its economy had contracted by 13% over the past two years.
All the major German banks have now made preparations for a Greek eurozone exit. Said Bernd Richter of Capco consultants: ‘The big banks did their homework some time ago. For any bank that is not prepared, the consequences will be painful.’
Meanwhile the UK, whose bankers and bosses are dreading another banking collapse, is in slump and, contrary to all of the Bank of England’s propaganda, has just been hit by a ‘shock’ inflation rise.
The CPI inflation rate for July rose to 2.6% while the RPI rate rose to 3.2%. Meanwhile rail fares are due to rise by up to 6%.
It is obvious that the working class and the middle class can no longer afford to prop up an out of date capitalist system. The time has come for a socialist revolution to consign the capitalist system to the dustbin where it rightly belongs.
