Eurozone recession fears reignited as German economy barely grows and France stagnates again

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The eurozone is teetering on the brink of recession after shrinking 0.2 per cent between April and June and flatlining in the previous quarter.

Fears that the region faces a disastrous downturn were ramped up by news that Germany’s growth slowed to a virtual standstill and France continued to stagnate in the period.

Just one more quarter of negative growth will plunge the single currency area into recession.

The German economy expanded by a modest 0.3 percent between April and June – beating forecasts but representing a slowdown from the 0.5 per cent growth recorded in the previous three months.

A closely watched German sentiment survey also showed business confidence had taken a battering for the fourth month running.

France announced zero growth for the third quarter in a row.

The eurozone contraction confirmed that it was in a recession phase, economist Aline Schuiling of ABN Amro told Reuters.

‘What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising. So there is still a lot of uncertainty related to the crisis.

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