The eurozone’s return to recession is particularly bad news because it is now hitting once strong economies like Germany. This means the recession will last longer and have a bigger impact on U.S. consumers and companies.
Figures released today showed that collectively the economies of the 17-country eurozone contracted by 0.1 percent between July and September. While this is a slight improvement over the second quarter of the year when it shrank by 0.2 percent, the definition of a recession is two straight quarters of contraction. Most analysts believe that the recession will continue at least until the end of 2012.
“The recession in southern Europe is slowly creeping to other countries,” says Martin Van Vliet, an analyst with ING. “If you look at the indicators for the fourth quarter you see that even Germany many not grow again and that shows that the economy has an enormous need for a new impulse.”
What Europe needs is a healthy dose of the free market, coupled with a re-birth of the western entrepreneurial spirit. Add to that a re-energized work ethic, and Europe may make it.