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Debt Crisis: Eurozone to slump into brief recession at end of year – experts

THE EUROZONE will fall into a brief recession for two quarters at the end of this year and beginning of next year, forecasts from leading European econo>mic institutes warned today.

The forecasts come from Germany’s Ifo, Italy’s Istat and France’s Insee while all also lowered their forecasts from earlier ones issued in October.

Eurozone gross domestic product will contract by 0.3pc in the last quarter of this year followed by 0.2pc in the first three months of 2012 – the common definition of a recession is two consecutive quarters of contraction.

"Taking stock of the deterioration of business surveys since the summer, the euro zone is expected to undergo a short recession with GDP declining around the turn of the year and stagnating in Q2 2012," they said in a statement.

"Household consumption will be held back by fiscal consolidation and deteriorating labour market conditions."

The 17-member eurozone is expected to return to 0.1pc growth in the second quarter of next year.

Investment is also expected to fall due to public sector cutbacks and private companies delaying spending on projects.

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