The eurozone's economy suffers its worst quarterly performance since 2013

08:39 | 22/12/2019 Global Economy

The eurozone's stagnating economy has suffered its worst performance for six years with uncertainty over Brexit partly to blame, economists said recently.

the eurozones economy suffers its worst quarterly performance since 2013
People go shopping at a supermarket in Toulouse, France

A survey by global data providers IHS Markit said manufacturing and job creation had slumped with 'gloomy prospects for the year ahead.'

Chris Williamson, the London firm's chief economist, said Brexit was a factor in the EU's difficulties. He said: 'The latest decline was the second-largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead up to the general election.'

HS Markit's 'purchasing managers index' (PMI) for the eurozone, a key business indicator, stagnated at 50.6 points in December, unchanged from the previous month. The PMI for manufacturing fell to 45.9 while services rose slightly to 52.4. Any reading below 50 indicates contracting conditions.

Mr Williamson said: 'The eurozone economy closes out 2019 mired in its worst spell since 2013, with businesses struggling against the headwinds of near-stagnant demand and gloomy prospects for the year ahead.

'The economy has been stuck in crawler gear for four straight months.'

He added: 'Job creation has almost ground to a halt, down to its lowest for over five years as companies seek to reduce overheads in the weak trading environment and uncertain outlook.'

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics said: 'Manufacturing in the euro area is stuck in recession, but resilient services are just about keeping the economy’s head above water.'

The forecast mirrors the gloom also predicted by the European Central Bank, which downgraded growth in the eurozone for next year to a feeble 1.1 per cent.

Germany's economy has been performing particularly poorly where business activity fell for a fourth consecutive month due to a slump in demand for cars.

The French economy, despite a wave of anti-reform strikes, is 'providing a key area of support to help keep the eurozone growing,' Mr Williamson added.

French Finance Minister Bruno Le Maire, said he now expected his country's economy to grow by just 1.3 per cent this year, down from a previous 1.4 per cent estimate.

This brings the French government's outlook into line with growth forecasts by both the Bank of France and the Insee national statistics bureau.

Theo Dailymail