EU/France economy

Eurozone hits all-time low GDP fall

Article published on the 2009-05-15 Latest update 2009-05-15 14:07 TU

A job centre in Madrid
(Photo: AFP)

The eurozone has experienced a record drop in production of 2.5 per cent in the first quarter of 2009. The fall is the fourth quarterly drop for 16 countries in the zone, which was set up in 1995. And there was grim economic news in the rest of Europe, with 1.9 per cent negative growth in the UK.

Gross Domestic Product in the eurozone is 4.6 per cent below what it was in the first quarter of 2008, according to the official statistics body, Eurostat.

France is officially in recession, while the global financial crisis is biting hard in Germany and Italy. Figures released today show that the French economy has effectively been in recession for the last 12 months.

The national statistics agency, Insee, reports that Gross Domestic Product shrank 1.2 per cent in the first quarter of 2009. But France has been in negative growth since the second quarter of last year.

Ahead of the latest figures, the government predicted a drop in output of 2.5 per cent for 2009, but Finance Minister Christine Lagarde now says it will be closer to three per cent.

Germany has also announced that its own recession deepened in the first quarter. During this period, the economy shrank by 3.8 per cent, the greatest contraction for 40 years. The figures released by the government show that the recession has blown a massive hole in Germany's public finances with a sharp drop in tax receipts set against rocketing government spending.

Italy's economy shrank by 2.4 per cent in the first quarter due to a slump in activity by agriculture, industry and services.

Spain's GDP fell 1.8 per cent.

Poor figures are also expected from Austria and Hungary.

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