Eurozone back in recession

 
Anti-austerity protesters in Madrid, 14 November Millions of Europeans took industrial action on Wednesday

The eurozone is back in its second recession since 2009. Double dip is here.

Both France and Germany managed modest growth in the third quarter, but their economies are slowing. The eurozone's strongest economies cannot escape the ill winds blowing elsewhere.

Spain is now in the second year of recession. Its economy has been shrinking for 15 months. The economy which saw the biggest fall in the last quarter was the Netherlands - it shrank by 1.1%. Both northern and southern Europe are hurting.

The charge levelled at Germany and the European Commission is that they under-estimated the effects of austerity on output. There are signs that the Commission is backtracking. Spain is the latest country to be allowed to miss targets for reducing its deficit and to be granted a reprieve. Portugal and Greece have also been granted more time.

The eurozone is in a bind. Its policy is to reduce deficits and to adopt structural reforms, such as greater flexibility in the labour market. The heart of the problem, however, is the lack of competitiveness of many southern countries in relation to Germany. The gap cannot be narrowed by devaluation in a monetary union. The only option is to slash wages and pensions and to reduce unit labour costs. That, of course, weakens demand and pushes countries further into recession.

That is what is driving the massive protests - the sense that countries face years of hardship. The single currency is not seen as delivering higher living standards, but pain. And next year the European Commission sees growth of 0.1% at best.

There are some green shoots: Spain and Portugal's exports are doing well, but it is doubtful that exports alone will return these countries to growth. What they may indicate is that over time some of the reforms will bring benefits, but Europe does not have time.

It was noticeable last night in Madrid that when Chancellor Angela Merkel's name was mentioned the boos echoed around the crowd. One of the leaders of the union which organised the protests said today "nothing is getting better. The situation is getting worse". The size of the crowds on the streets last night - maybe 300,000, maybe more - should serve as a warning that Europe's people will not be patient for ever.

The President of the European Central Bank, Mario Draghi, has spoken of "a slow, gradual, but also solid recovery". It does not feel that way and Europe's officials have a poor record in judging this crisis.

Today's figures and the street protests are likely to strengthen the hands of those who say the current policy is damaging Europe's economy.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 394.

    #393 Chryses

    -- I suppose your protestations --are a method of escape from a worse reality.

  • rate this
    0

    Comment number 393.

    All for All (391),

    “Chryses@387

    Your claim: was that "communism" has been practised, without reference to any specific stage …”

    Specifics? OK. The Soviet Union (1,066,000) [http://tinyurl.com/co3cjzl ], Democratic Kampuchea (about 20% of the country's population) [http://tinyurl.com/y6nttc ]

  • rate this
    0

    Comment number 392.

    All for All (385),

    “… Any society that allows 'common humanity' to be driven out by fear & greed, ruled by bullies & tricksters, will risk 'mixed economy' mafia-state …”

    Could be. What society do you believe satisfies your description above, and why?

  • rate this
    0

    Comment number 391.

    Chryses@387

    Your claim: was that "communism" has been practised, without reference to any specific stage, of thought or action, in the minds or actions of any significant 'players' in history

    My observation: 'murderous tyrannies' - always of complex origin - might self-describe as 'capitalist' or 'communist', yet betray their implicit principle and 'deserve' some amongst 'enemies of the state'

  • rate this
    +1

    Comment number 390.

    378 QOT

    -The fall of Communism .. may be the ´victors´ downfall.
    =

    The last two remaining superpowers held each other up and one needed the other for its raison d'etre. When one collapsed the other exposed the weaknes at its core but kept up the pretence of superiority by illegal warfare and invasions.

    After Guantanamo, assassinations, drone attacks etc it lost its moral high ground.

  • rate this
    +2

    Comment number 389.

    #387 Chryses

    -- America is no longer the center of the world.

    --the end of Communism was the beginning of the change.

    -- Gore Vidal put the date much earlier -- but the fall of the Berlin Wall is much easier to comprehend.

    --the beginning of Globalization.

  • rate this
    0

    Comment number 388.

    quietoaktree (386),

    “… there are many ways to fall -- and being a murderous tyranny or not is irrelevant …”

    Perhaps you think that being a murderous tyranny is irrelevant, but many people, I among them, disapprove of such government policies. Do you?

    “… Claiming a moral ´high ground´ gives no protection …”

    I didn’t suggest so, did I? As I didn't, what's your point?

  • rate this
    0

    Comment number 387.

    All for All (385),

    “Chryses@384
    ‘Murderous tyrannies’ make many claims …”

    Extraordinary claims need extraordinary evidence? Fair enough. How might one describe a government with a policy to kill its citizens?

    Communism ("enemy of the state") fits that description, doesn’t it?

    Should you be interested in the supporting data, you may find it here: http://tinyurl.com/y9e9c76

  • rate this
    0

    Comment number 386.

    #383 Chryses

    "As Communism has been a murderous tyranny where practiced, the victors would be hard pressed to fall lower than that failure."

    --there are many ways to fall -- and being a murderous tyranny or not is irrelevant.

    Claiming a moral ´high ground´ gives no protection --the status quo of the Cold War with its divisions and ´spheres of influence´has ended.

    -- dice are thrown daily.

  • rate this
    0

    Comment number 385.

    Chryses@384
    "Murderous tyrannies" make many claims

    Any society that allows 'common humanity' to be driven out by fear & greed, ruled by bullies & tricksters, will risk 'mixed economy' mafia-state, on to frank dictatorship, then to successions of 'murderous tyranny', all claiming to uphold something of value, 'leadership', 'capitalist virtues', 'communist virtues'

    Consider reclaiming 'democracy'?

  • rate this
    0

    Comment number 384.

    Chryses @382
    "no man an island"
    Comprehended?

    @282 implicit denial, mis-citing Dr Bob @239 "SOME in Greek govt complicit"
    Forgetting role of EU & Goldman Sachs?

    Then 'forgetting" inspirers of deregulation & overloading

    When 'ordinary people' lured into peril… responsibility surely shared?

    What the reason for such 'forgetfulness'?

    Never to escape 'the remove'?

  • rate this
    0

    Comment number 383.

    quietoaktree (378),

    “… The fall of Communism was a prayer answered for many -- but may be the ´victors´ downfall”

    As Communism has been a murderous tyranny where practiced, the victors would be hard pressed to fall lower than that failure.

  • rate this
    0

    Comment number 382.

    All for All (293),

    “Chryses @282
    No connection? …”

    No connection to what?

    “… Is "responsibility" your quibble here? …”

    Quibble? No, not really. I think as many others think, that people are responsible for their decisions. How about you? Reading your posts, I understand your position to be that context, rather than the individual is responsible for people's decisions.

  • rate this
    0

    Comment number 381.

    David Horton @380
    "making worse"

    Debt 'jubilee', forgiveness, invented long ago: allowing 'real life' game of Monopoly to re-start, with 'a good start for the last winners, a chance for others at least to reconstitute 'society & demand'

    Aurelius etc miss the logic: Unions and States 'die' not from being too big or small, but from the costs of inequality, division & instability & 'driven folly'

  • rate this
    +1

    Comment number 380.

    What is becoming more and more obvious, even to some quite hardened EUphiles, is that the various plans, schemes and strategies being imposed by Draghi, Barosso, Merkel, Schulz, Rompuy et al, are making things worse for PIIGS.

    Not unsure that we haven't gone past it already, but there is a point in time when either the eurozone taxpayer says "Enough", or one of the PIIGS simply says "forget it."

  • rate this
    -1

    Comment number 379.

    376"Europe can recover+survive but only if it wants to"

    You're being as unrealistic as they are. It's time to administer last rights, look up the phone number of the coroner, and call the undertaker before the vultures start circling. If you want to be productive, you can start writing the eulogy...or an epitaph...or just a short piece for the obit column in the newspaper. RIP Europe.

  • rate this
    +3

    Comment number 378.

    #377 DavidinUSA

    --I must admit --have no idea how this mess is going to end. The world appeared complicated with the ´nuclear fear´,the ´spheres of influence´, ´non-alligned nations´etc. A ´Pandoras box´has been opened and the financial problems is only one of the many Hydra Heads on the loose.

    -The fall of Communism was a prayer answered for many -- but may be the ´victors´ downfall.

  • rate this
    0

    Comment number 377.

    The EU as a whole slips into insolvency.

    The US is already there (but masks it by having a credible currency - for the moment).

    Default and/or inflation will be the only way to wipe out the debts. Perhaps investing in a few gold coins would be wise (although their price is now rather high), given the continuing devaluation of fiat currencies.

  • rate this
    -1

    Comment number 376.

    Sieu: Europe is dying

    Europe is badly wounded, taking meds to ease the pain,
    but it hasn't addressed the actual problem, the root cause,
    that has put it in such rough shape

    If the Dr isn't helping
    is it perhaps time to seek another Dr?

    Europe can recover+survive but only if it wants to

  • rate this
    +1

    Comment number 375.

    374"Has Europe lost its will to take charge>?"

    No, Europe lost its will to stare cold hard reality in the face.EU itself is a reaction to that reality, the diminution of Europe as significant to the rest of the world.Now the lies that politicians told their constituents, each other, themselves can no longer be denied nor is it credible that one day the promises will be be kept.Europe is dying.

 

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