Could the Eurozone Be in for Another Recession?

Posted by Allison on 24 October 2014, 16:50

Remember the recession most of us lived through a few years ago? It was said to be one of the worst ones in many years. Happily things are now looking a lot stronger in many places, but recent reports have suggested the Eurozone is not one of them.

In fact it looks like while some countries are doing well and improving on their stats, the Eurozone is still struggling to get itself out of the mire. The latest news stories reveal that the unthinkable could be about to happen. The unthinkable in this case is the prospect of a triple-dip recession – something that could be very unpleasant for anyone living in the Eurozone area that uses the euro.

This situation could have a fallout that affects other parts of the world too. Most obvious here is the UK, which has been doing much better financially and economically in recent times. There are fears that a lacklustre performance in the Eurozone could drag down the UK too, something that does not bode well as far as the UK is concerned.

Different countries in the Eurozone are experiencing different problems according to reports. For example Italy has seen a drop in output coming from the services area of business. Meanwhile over in France the same sector was struggling to achieve anything of note, while manufacturing didn’t look too promising either.

The situation in the Eurozone will definitely have a knock-on effect with regard to other countries as well. Those in charge are trying to do something about it, mainly by purchasing assets in France, in the hope this will perk things up. Covered bonds have been bought that will hopefully increase demand, but it remains to be seen if this is the case.

We could probably expect the euro to struggle somewhat as well on the currency markets, and it looks as though this is the case. Recent head-to-heads between the euro and various other currencies have seen it fail to make much headway in terms of increasing in value.

This is a long-term situation of course, and there is a chance that the Eurozone will recover in time. But how long will it take?