Locked down under new restrictions imposed as the COVID virus returned in strength, Europe’s economies have again weakened and now face a double-dip recession, a variety of data show, as reported by the Financial Times.
A double-dip recession happens when a period of contraction is followed by a short growth spurt, then another slide into recession.
Visits to stores, restaurants, and workplaces across the Eurozone have fallen so far this month, according to foot-traffic analysts, as has consumer spending. Consumer confidence also has shrunk, surveys have found.
The region’s economy contracted around 2 percent in the final three months of 2020, economists estimate. The virus’s persistence and a slow roll-out of vaccines point to another contraction in this year’s first quarter, sparking Europe’s second recession in less than two years, many predict.
A recession is defined as two consecutive quarters of economic contraction.
Strictures on businesses and social mobility in Germany and the Netherlands are now more stringent than those imposed last spring. German consumers spent 25 percent less in this month’s second week than in the same week in 2019, reported research firm Fable Data. Only groceries were spared in the contraction, Fable noted.
The Eurozone’s industrial production was buoyed last fall, however, by returning demand for exports. That strength helped soften the economic blow. Still, there is no guarantee that manufacturing’s performance can be relied on to continue, economists warned.
The GDP of former Eurozone member Britain lost 2.6 percent in November when a second economic shutdown was mandated, following six consecutive months of growth.
Although November’s contraction was far less dire than the 18-percent plunge seen last April, any sustained economic recovery is now further away.
“We should expect the economy to get worse before it gets better,” Rishi Sunak, chancellor of the exchequer, told Parliament on 11 January.
