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Eurozone slump could exceed the last one

April 2, 2013 at 1:58 PM   |   Comments

BRUSSELS, April 2 (UPI) -- Recent data shows that the current recession in the 17-member eurozone will last longer than the last one, an economist from Markit Economics said.

"The eurozone manufacturing sector looks likely to have acted as a drag on the economy in the first quarter, with an acceleration in the rate of decline in March raising the risk that the downturn may also intensify in the second quarter," said Chris Williamson, Markit's chief economist.

The Wall Street Journal reported Tuesday that evidence that the 17 countries that use the euro as currency will notch a sixth consecutive quarter in which the region's economy contracted is mounting up. That would make the current recession longer than the one that followed the 2008 financial crisis.

Recent data includes Tuesday's announcement that unemployment in the currency region reached a record 12 percent in February. A Markit index of manufacturing activity showed its headline business activity index at the lowest point in three months in March.

The index for new orders also dropped to a three-month low in the month, Markit said.

The data could put pressure on the European Central Bank to cut lending rates, but there is no guarantee such an announcement will be made after Thursday's fiscal policy meeting.

Some of the bank's policy makers have already voiced concern over the limited effect a cut in interest rates would have, as it would not help the smaller economies as much as the larger ones, given the trouble in the banking system currently plaguing the smaller countries.

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