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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.
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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.