Fears Grow Over European Recession as Indexes Drop

Ben May, an economist who specializes in Europe for international research firm Capital Economics, was quoted in the Daily Telegraph as saying that “It appears increasingly likely that the economy may now have slipped back into recession.” The fall in eurozone PMI, he said, “reflected steep declines in both the manufacturing and services indices, suggesting that the deterioration in growth prospects reflects developments both at home and abroad. On past form, the headline index is now consistent with a quarterly contraction in GDP of around 1%.”

Economist Nouriel Roubini (left), co-founder and chairman of Roubini Global Economics LLC, had even more dire words. He tweeted that eurozone politicians were “hell-bent to commit growth harakiri” as “financial engineering without growth soon will lead to defaults and euro zone break-up.” In a Bloomberg report, he added that there was a 50% risk that the U.S., the U.K. and the euro region will fall into recession in the next 12 months.

Reuters quoted Peter Vanden Houte, an economist at ING Group in Brussels,saying, “This is a miserable report, highlighting the fact that the euro zone is falling into recession again. The snail-like progress in the resolution of the European debt crisis is unlikely to alter this picture soon.”