Italy recession deeper than first estimated

Woman outside perfume shop in Rome
Image caption Consumer spending in Italy fell between July and September

The Italian economy shrank by 0.8% between April and June, slightly more than previously estimated, official figures have shown.

A bigger drop in investment and consumer spending accounted for the downward revision from the 0.7% contraction estimated last month.

Meanwhile, the French central bank has said it expects the country's economy to contract in the third quarter.

This is despite figures showing a surprise rise in industrial production.

'Nasty surprise'

Italy's economy shrank by 2.6% compared with a year earlier, compared with the previous estimate of 2.5%, the national statistics institute Istat said.

Compared with the previous quarter, domestic consumption fell by 0.7%, while investment dropped by 2.3%.

"It's worse than we expected and the size of the contraction in consumer spending is a particularly nasty surprise," said Unicredit economist Loredana Federico.

The Italian economy - the eurozone's third largest - has contracted for the past four quarters as the government has implemented a series of drastic spending cuts designed to cut its debt levels, which currently stand at more than the country's annual economic output.

Another eurozone heavyweight economy, France, is also set for contraction, following three consecutive quarters of zero growth.

On Monday, the country's central bank confirmed it expected the economy to shrink by 0.1% in the current quarter.

This is despite figures from the national statistics institute, Insee, showing that industrial production rose by a higher-than-expected 0.2% in July compared with the previous month.

On Sunday, French President Francois Hollande said he expected economic growth in France to be "barely above zero" in 2012, which chimes with the latest forecast from the OECD of 0.1% growth this year.

The body has forecast a contraction in the Italian economy of 2.4% this year.

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