Eurozone economies declined by record 12.1% in 2nd quarter

  • Eurozone economies declined by record 12.1% in 2nd quarter

Eurozone economies declined by record 12.1% in 2nd quarter

GDP in Italy and France also fell sharply but less than forecast, respectively by 12.4% and 13.8%.

For the currency union as a whole it was the biggest decline since the records started in 1995.

Unlike in the United States, many people in France and Europe have kept their jobs despite the lockdown, thanks to a government scheme that subsidised salaries.

European governments are countering the recession with massive stimulus measures. European Union leaders have agreed on a 750 billion-euro recovery fund backed by common borrowing to support the recovery from 2021.

And continued to defy expectations of a slowdown.

Gains in the techs helped provide some support but not enough to make a huge difference at the end of yet another turbulent week.

However, the jobless rate for July held steady at 6.4%, unchanged from June in a sign that the initial effects of the pandemic were easing.

Spain in mid-March went into a more than three-month lockdown, bringing much economic activity to a halt, as COVID-19 cases and deaths surged.

In another hopeful sign, consumer spending - the traditional engine of the French economy - shot back above its pre-lockdown level in June, INSEE said.

"Beyond this initial bounce, the recovery is set to be gradual and uneven", with pre-virus output regained only by mid-2022, she said, adding that "recent flare-ups of the virus in several European countries risk derailing this recovery".

"This was the sharpest decline since the quarterly GDP calculations for Germany began in 1970", the statistics office said.

It said the drop was "part of an global context in which the main economies are recording reductions of a similar magnitude due to the spread of the pandemic".

The seasonally-adjusted drop in gross domestic product (GDP) from the first quarter was not as steep as many analysts had expected, but worse than the performance of most of France's eurozone peers. The pain has been so damaging to jobs and industries that the government is talking down the possibility of another nationwide lockdown as infections tick upwards again.

"We are not powerless in the face of the crisis", Finance Minister Bruno Le Maire said after the figures were released.