Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

FTSE under pressure as eurozone slumps back into recession

FTSE under pressure as eurozone slumps back into recession

Despite France and Germany growing in the third quarter the eurozone is now in its second recession since the financial crisis began.

National growth data for quarter three showed that even though France and Germany's economies expanded by 0.2%, the single currency bloc could not skirt a fully blown slump.

The eurozone contracted by 0.1% in the last three months, following its 0.2% contraction in quarter two.

Even before the official data was unveiled economists warned the eurozone could not escape the gloom, with Capital Economics' weighted average of the available data predicting the 0.1% contraction.

Although the expansions in France and Germany came as a positive surprise, these were not enough to ease the overall squeeze on Europe, sending the FTSE 100 down as traders digested the data.

At shortly after 10am the index was down 0.39% at 5,699.

Figures for the individual eurozone constituents are still coming through, though initial data suggest that while consumer spending edged up overall in the eurozone in the third quarter, investment was very weak.

Howard Archer, of IHS Global Insight, said that if it had not been for net trade holding up well, the contraction would have been deeper.

Looking forward, chief European economist Archer said the prospects for the single currency zone in the fourth quarter look bleak, spelling a likely cut in eurozone interest rates.

'With the eurozone seemingly headed for further GDP contraction in the fourth quarter after moving officially into recession in the third quarter, and with the underlying inflation situation in the single currency area looking far from alarming, we believe the ECB will take interest rates down from 0.75% to 0.50% sooner rather than later,' he said.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Play Japan's slump, the umbrella revolution and the battle for Brazil

Japan's slump, the umbrella revolution and the battle for Brazil

With the arrows of Abenomics appearing to be missing their targets and political uncertainty rife in Hong Kong and Brazil we take a look at investor sentiment in this week's Investment Pulse

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter