Coffee House

Eurozone enters double dip recession

15 November 2012

9:50 AM

15 November 2012

9:50 AM

The Eurozone is now in recession – this, at least, is what is implied by today’s avalanche of dire economic data. Eurostat has not (yet) made this calculation; but Capital Economics has. Take into account the relative size of the Eurozone economies who have declared figures and it suggests a fall of 0.1 per cent for Q3 which, which, coming after the contraction of 0.2 per cent in Q2, would meet the test for recession (two consecutive quarters of negative growth). So, like Britain, a double-dip recession.

Greece and Portugal are still in meltdown. The Germans are doing okay, with growth of 0.2 per cent for Q3. This is mainly because of the fact that their currency would be worth about a third more if they had the Deutschmark. The Euro crisis is making German exporters that much more competitive. This is why the Germans tolerate the bailouts: they know that, if the Eurozone was not so weak, their wares would cost a hell of a lot more to foreigners. So Germany is, in a very meaningful way, benefitting from this crisis.


Capital Economics says that the Eurozone’s GDP might fall by about 0.7 per cent for this year and, far worse, contract by another 2.5 per cent the year after. Making debt cheaper does not make problems go away. It just makes them easier to cover up: for a while. After Sir Mervyn King’s dire prognosis yesterday, Britain looks like it is midway through a Japanese-style ‘lost decade’; but the Eurozone may have longer to spend in this economic purgatory.

UPDATE Eurostat have now confirmed (pdf) that the Eurozone is in recession. But as with so many of the big stories, Coffee Housers were able to read it here first.

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.

Show comments
  • the viceroy’s gin


    But as with so many of the big stories, Coffee Housers were able to read it here first.


    You mean, similar to the way you told us first that your Cameroonian heroes were going to “cut”?

    You know, all those mythical “cuts”?

    And oh yes, you also told us first about “The Big Society”. And not a moment too soon, I might add. I don’t know what we would have done with ourselves, if you Speccie teenagers hadn’t trilled that from the rooftops.

    Well done, then. You’ve always been first with the Cameroonian line, there’s no denying.

  • Noa

    Expect the UK situation to get much much worse as The fatuous ‘deficit reduction’ programme increases public spending whilst failing to reduce costs.
    So far the UK is balanced in the middle; poised to plunge either way towards the depths of recession that engulf Slovenia, or seek the giddy heights of growth which Poland, Estonia and Latvia have obtained. Of course we are funding the latters growth both directly through our EU contributions and indirectly through the millions of Poles and other eastern Europeans we now employ or support, at the expense of our own people.


    The peripheral electorates will sooner or later choose governments that leave the Euro. Yesterday’s EU-wide protests were a first. We may even see some ENLIGHTENED leadership at European level. Boosting neo-Nazi Golden Dawn to 14 % (THIRD) in the polls comes out of ‘The Boys from Brazil’ NOT a European Union.

  • andagain

    After Sir Mervyn King’s dire prognosis yesterday, Britain looks like it is midway through a Japanese-style ‘lost decade’;

    Only if we are very lucky.

    • Dimoto

      The closer King gets to the exit, the more doom ‘n gloom he spreads. He seems to love the limelight.
      What part of a central bank governor’s remit, instructs that in a period of fragile confidence, the governor should concentrate on destroying it ?
      I wish he’d just spend his remaining time watching the rugby, cricket and tennis – he has nothing worthwhile to contribute.

      • the viceroy’s gin

        Except bales of fresh cash, then?

  • toco10

    Nice to know the UK is streets ahead of the Eurozone in terms of growth and financial management but it spells bad news for us from an economic and employment perspective.It will also encourage even more economic migrants who soak up welfare benefits and increase unemployment for British nationals.The Euro itself was never going to work given the very different cultures and practices of the countries involved so the quicker it is wound down in an orderly manner the better.
    Thank goodness the last Election prevented Labour from bankrupting us.

  • TomTom

    EuroZone is not in recession but in Depression. The situation in Club Med gets continually worse with 50% youth unemployment and 28% overall unemployment. Peugeot is bankrupt and France is headed for deep Slump. in fact cannot we use the 1930s term Slump and face reality ? Today Munich had a power outage which presages a future of power cuts as prices increase dramatically. The people who are making money today are not the ones spending it and those who need to spend it don’t have it. This system is broken and is no longer capable of self-balancing……so stop talking of recession when what we have is Structural Imbalance globally

  • TheOtherTurnipTaliban

    Thank God reality is finally returning to Europe, after months of Guardian articles, MEPs proselytising the virtues of “unity” and EU apparatchik press releases, now they know exactly what the markets think of their bullshit.

    Brace yourself, we are expecting turbulence ahead.

  • Earlshill

    It’s a slow death in the Eurozone, and I give them another two years of GDP contraction before the first serious social and political insurrection takes place. As for a lost decade, in the UK or elsewhere, the more serious economists see nothing except a continuous and drastic fall in Europe’s living standards for the next 20 years. The social consequences will be horrendous.

    • TheOtherTurnipTaliban

      Watching the molotovs and rubber bullets fly across the eurozone yesterday made me wonder if we aren’t reaching the tipping point apace.

    • TomTom

      Not sure they will be horrendous……might be liberating as it was in Eastern Europe in 1989

    • 2trueblue

      Amazing that Balls has not been on the telly telling them how to sort it out. Whatever happens the EU elite will not allow the eurozone to collapse. They are completely committed to a united Europe.