News / Europe

Europe Faces More Negative Economic Indicators

Euro banknotes and a calculator are placed on a currency graph and ticker (File)
Euro banknotes and a calculator are placed on a currency graph and ticker (File)

The 17 eurozone nations are facing a new wave of negative economic indicators, a further signal that Europe's currency bloc is headed toward a recession.

The European Commission said Friday that executive and consumer confidence dropped in December to the lowest point in more than two years. Factory orders in Germany, with the eurozone's strongest economy, fell nearly 5 percent in November, erasing a similar gain the month before.

Meanwhile, retail sales slid eight-tenths of a percent in November, and unemployment remained at a record high of 10.3 percent for the second straight month. In the broader 27-nation European Union, more than 23 million workers were unemployed in October. Spain topped the list with a nearly 23 percent jobless rate.

One economic analyst, Martin Van Vliet of the ING bank, said the breadth of the new reports "has recession written all over it." He said Europe's two-year governmental debt crisis, fears of a recession and austerity measures imposed by governments, cut consumer confidence in the last several months.

Three countries - Greece, Ireland and Portugal - have already been forced to seek international bailouts, and Greece is negotiating the terms of a new $169 billion aid package. Financial analysts fear that Italy and Spain, the eurozone's third and fourth largest economies, could also need help but that their debts could be too large for the continent to handle.

Borrowing costs for both Italy and Spain spiraled up on Friday, with Italy's interest rate for 10-year bonds topping 7 percent. European governments consider that borrowing rate to be unsustainable over the long term.    

Hungary, just outside the eurozone, also faced new negative economic news. Fitch Ratings, a financial services firm, downgraded the Budapest government's credit standing to junk status. Fitch said the new rating reflects the "further deterioration" of the country's economy.   

Some information for this report was provided by AP, AFP and Reuters.

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