The top economies around Europe are either in recessions or about to enter one, according to multiple sources around the continent.
According to Bloomberg in recent days, S&P Global’s flash purchasing manager index (PMI) for France has dropped by more than had been predicted by economists, taking the figure to 48.8. The threshold separating expansion from contraction is 50.
Meanwhile, in Germany, Reuters is reporting that the nation’s economic downturn has eased off in what could be a signal of a much-shallower recession than previously thought. The same PMI index for that nation, which tracks the manufacturing and services sectors, rose from 45.1 to 46.4 between October and November.
Bloomberg wrote: “Europe is headed for a bleak winter, with the energy crisis and record inflation weighing on output. The OECD on Tuesday warned that Germany would contract 0.3% in 2023, while it lowered its forecast for French growth in gross domestic product to 0.6%.”
Meanwhile, Italy is looking to stave off the worst of an incoming recession by releasing a budget totalling €35bn.
As Euronews reported: “Italy’s new government, headed by prime minister Giorgia Meloni, signed off a new budget on Tuesday with a €35bn spending plan and fiscal policies that seem intent to avoid a collision course with Brussels. The recently appointed premier hopes the spending boost will prompt a faster recovery in what is the eurozone’s third-largest economy, which the Treasury has forecast will contract in the current quarter and the first quarter of next year.”
It went on: “The new budget plans were approved at 00:30 on Tuesday by Meloni’s cabinet after a three-hour conference, her office said. The bill will now be put to the vote in parliament, which must pass it before the end of the year.”
Being British, I should not throw stones in this glass house, but given Italy’s chaotic politics over the last five decades, it should be expected that the vote will result in at least two more administrations before it passes.
Elsewhere, the media in Spain has been foretelling a recession for weeks. The Spanish version of expat news site The Local has been saying over the last month that data from the National Statistics Institute shows the nation’s growth being down 1.5% compared to the previous quarter, with inflation dropping to 7.3%.
The Local wrote: “Among western economies, Spain was also one of the worst hit by the economic fallout of the Covid pandemic, largely due to its heavy dependence on tourism. The country’s public accounts control body has warned that the Spanish economy could contract in the last quarter of this year and the first quarter of next — putting Spain in a technical recession.”