GDP: 3 of the 4 of Europe’s largest economies are diving
By TruePublica: Three of Europe’s biggest economic engines — the UK, Germany, and Italy — have taken a turn for the worse simultaneously and heading into negative territory.
The Eurozone growth also looks “dire” in the second quarter, mainly due to the contraction of the German economy.
Despite France and Spain doing well (albeit Spain does so from a low point anyway and only had one way to go), economists are now seeing all the signs of “elevated risks of outright falls in Italian and German GDP.”
Predictions of the UK entering a recession are becoming more real. The FT says that the UK faces the highest risk of recession in Europe and that may well be correct. A 0.2% contraction of Britain’s economy between April and June is first fall in GDP in six and a half years and fears are now growing of a full-blown recession, the first since the crash of 2007/8.
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News from the Office for National Statistics of the first fall in GDP in six and a half years sparked immediate speculation in the City that a further bout of Brexit jitters leading up to the new 31 October departure date could lead to a second successive quarter of negative growth. A technical recession is defined by two successive quarters of negative growth.
The ONS said all three main sectors of the economy struggled in the second quarter. Production – which includes manufacturing, energy and mining – contracted by 1.4% in the three months to June
The National Institute for Economic and Social Research, said that uncertainty surrounding the decision to leave the EU three years ago means there’s a one-in-four chance the economy could already be in recession.
The performance of the economy in the second three months of 2019 was much worse than most experts had predicted and was the weakest since the UK was mired in the global slump of the late 2000s.
Services – which account for about 80% of the economy – registered positive growth in the second quarter but the 0.1% expansion was well down on the 0.4% growth in the first three months of the year.
As recently as last week, the Bank of England said in its quarterly inflation report that it expected growth to flatline in the second quarter.
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