Wednesday 19 June 2019

Italian economy slips into recession amid spat with EU over budget plans

Italian Economy Minister Giovanni Tria
Italian Economy Minister Giovanni Tria Business Desk Business Desk

The Italian economy has slipped into recession in the final three months of the year, weighing on the wider eurozone's growth, official figures have showed.

The Italian statistics agency said Italy, the third-largest economy in the 19-country eurozone, contracted by a quarterly rate of 0.2pc in the fourth quarter.

Following a 0.1pc drop in GDP in the previous three-month period, that means Italy is in a technical recession, defined as two straight quarters of economic contraction.

The Italian economy has been hobbled by a lack of confidence and waning business activity following the new populist government's spat with the European Union's executive Commission over its budget plans.

The recession in Italy has weighed on the wider eurozone, which grew by only 0.2pc in the final three months of 2018, the same as in the previous quarter.

As a result, EU statistics agency Eurostat said that the eurozone expanded by 1.8pc in 2018 overall.

That is a weak figure after the bloc had started the year predicting only a modest slowdown from 2017's 2.3pc rate.

The eurozone has also been hobbled by an unexpected slowdown in Germany, Europe's biggest economy, which suffered an unexpected contraction in the third quarter largely due to changes in emissions standards that snarled auto sales.

Uncertainty over Britain's exit from the EU has weighed on sentiment.

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