Eurozone growth stalling as Greeks to vote on cuts
Published 07/12/2011 | 05:00
GROWTH across the eurozone slowed to just 0.2pc between July and September -- but, according to the European Union's statistics agency Eurostat, growth inside the eurozone is trailing the much faster expansion that is happening in EU economies that do not use the single currency.
It's the latest sign, if any were still needed, that the debt crisis is causing a collapse in business confidence and a slowdown in industrial output.
Greece is under-performing all other European countries, the data shows.
After 19 months of EU/IMF economic management, the Greek economy continues to shrink rapidly.
The news came as Greek lawmakers were due to vote late last night on an austerity budget for next year.
The budget is being put forward by the country's new technocratic prime minister Lucas Papademos. Lawmakers were expected to pass his proposed package of tax hikes and spending cuts aimed at cutting the country's deficit to 6.7pc of GDP next year.
The vote went ahead after the IMF agreed to release €2.2bn in emergency loans on Monday.
The Greek government is only expected to remain in office long enough to agree a second bailout -- and last night's budget is crucial to securing that deal. Elections are due to be held in late February.
The latest data shows that the entire eurozone will have followed Greece into recession, when data for the final three months of the year is compiled.
Portugal is also seeing its economy shrink.
Data for Ireland is not yet available, but Irish growth was running ahead of the euro average in the first half of the year.
That may not last long, however. The latest data shows investment into the euro economy was flat for a second quarter running in the three months to September.
Companies are selling down inventories, instead of gearing up for growth.
No eurozone country is now immune from the slowdown. Growth in Germany slowed to 0.5pc and the French economy grew by just 0.4pc.
Economic expansion in Spain, the eurozone's fourth largest economy, ground to a halt in the third quarter. The Netherlands also recorded a decline.
Those kinds of findings will pile more pressure on the ECB to cut interest rates on Thursday.
Many investors and economists think the ECB will cut rates again by 0.25pc to 1pc to to boost the economy -- by keeping cash flowing through the banking system at a low cost.