Evidence continues to mount that France and the Eurozone are facing a long period of recession. French economic output just contracted for the first time in 18 months, with Germany’s business activity plunging even deeper. The decline in output and demand has almost too many causes to list.
At six months into the unrest in Ukraine Europe’s energy import costs have now quadrupled. The costly conflict shows no sign of easing, as Brussels has abandoned diplomatic efforts with Moscow.
The current drought across the continent appears to be the worst in the last 500 years, hurting crop yields, sparking wildfires and increasing pessimism. That’s helped push the euro to its lowest level in 20 years - the euro is now worth less than the United States dollar.
Despite the increasing gloom last month the European Central Bank decided to raise interest rates for the first time in 11 years. That makes borrowing even more costly for businesses and individuals, and could spark mass layoffs, bankruptcies and home foreclosures.
