The economy of the 15-nations eurozone has slumped into recession for the first time ever, EU data released yesterday revealed, with GDP falling 0.2% in the second and third quarters.
The announcement in Brussels confirmed widely held fears that the eurozone had fallen into recession for the first time since its formation in 1999.
Howard Archer chief European economist at Global Insight warned that ‘the fourth quarter is likely to see a sharper fall in eurozone GDP as the financial crisis bites harder’.
On a 12-month comparison, the eurozone economy grew 0.7% in the third quarter, down sharply from 1.7% in the previous quarter, the official Eurostat agency said.
According to the figures, Europe’s largest economy, Germany, is in most trouble, with its economy contracting by 0.2% in the third quarter of 2008 after falling 0.4% in the previous three months.
Italy and other eurozone members joined Germany in official recession, while France, the eurozone’s second-largest economy, narrowly avoided it, with its economy managing a 0.1% increase in the July-September third quarter.
The Spanish economy contracted for the first time since 1993 in the third quarter, shrinking 0.2% compared with the three months to June.
Outside the eurozone, Britain suffered a 0.5% fall in economic growth in the third quarter.
• Bailed out Franco-Belgian bank Dexia reported a third-quarter loss of 1.54 billion euros ($1.96bn), and warned of a coming charge of about 1.5 billion euros from the sale of its FSA credit insurance unit.
Dexia blamed some 482 million euros of losses on the collapse of US investment banking giant Lehman Brothers in September and said it aimed to reduce costs by 15% over the next three years in a restructuring programme.
Without specifying if there would be job losses, the bank said it had already identified cost savings of 300 million euros and saw significantly more in 2009.
• Second news story
RECORD NUMBER OF BANKRUPTS
The number of people in England and Wales facing bankruptcy rose by 7% in the third quarter of the year, against the same period last year.
A total of 13,653 people petitioned for bankruptcy in the three months to the end of September, Ministry of Justice figures showed.
This is the second-highest number recorded by the ministry since 1995.
There were also 3,184 company winding-up petitions, an increase of 13%.
The number of creditor petitions rose 10% to 5,499 in the quarter.
As well as the rise in bankruptcy petitions, official figures revealed that there has also been a sharp rise in the number of people and companies in England and Wales actually being declared insolvent.
Individual insolvencies went up by 8.8% in the third quarter of the year to reach 27,087, government figures showed earlier this month.
Corporate liquidations also went up by 10.5% in the same period, to 4,001.
The number of firms being liquidated is now up by 26.3% on a year ago.