Thursday, August 25, 2011

Europe is facing stagnation as its growth engine stalls

Europe faces the threat of economic stagnation after an alarming collapse in business confidence during August, a gloomy industry survey warned today.

Financial information firm Markit's latest worrying snapshot of flagging growth in the eurozone showed activity stuck at 22-month lows during the month and the manufacturing sector shrinking for the first time since 2009.

It also revealed confidence among the region's services firms falling at the fastest pace since the height of the financial crisis in October 2008 as sentiment was rocked by Europe's sovereign debt crisis and biting austerity measures.

The figures raise the prospect of even weaker growth among the 17 nations using the eurozone after last week's sluggish 0.2% advance between April and June. The two largest economies, France and Germany, slowed to a virtual standstill and the rest of Europe saw falling output for the third month in a row, Markit added.

Chief economist Chris Williamson said: "Growth in the third quarter could be even slower than the disappointing 0.2% rise seen in the three months to June. Most worrying is the near-stagnation of Germany, which suggests that the region's main engine of growth has stalled." more