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Eurozone slides into double-dip recession

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The eurozone has officially entered recession, the latest GDP data shows, as growth in core economies was offset by a surprisingly weak figure from the Netherlands.

The eurozone as a whole contracted 0.1% in Q3, in line with forecasts and following a 0.2% contraction in Q2.

The figure represents the second time the eurozone has fallen into recession since the financial crisis in 2008.

Although core eurozone economies France and Germany reported growth, continued weakness in the peripheral economies hit the headline figure in Q3 2012, as did a 1.1% contraction from the Netherlands.

France posted its first GDP growth in a year at 0.2%, while Germany reported the same level of growth.

GDP in Italy fell by 0.2% and Spain by 0.3%, while Greece and Portugal remain mired in deep recession.

Jennifer McKeown, senior European economist at Capital Economics, said business surveys point to worse news to come from Europe in the fourth quarter.

“With austerity starting to hit French households and German unemployment beginning to rise, the outlook for domestic spending is bleak even in the core.

“Eurozone GDP might fall by a touch less than our -0.7% forecast in 2012 as a whole, but we still expect a contraction of around 2.5% next year as the peripheral debt crisis drags on.”

In contrast, the UK posted 1% growth in Q3, according to the first estimate from the Office for National Statistics, but several one-off factors boosted the figure. Yesterday ratings agency Moody’s warned the UK would lose its AAA-rating if it was to slide into a triple-dip recession. 

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