The Economy Today

EU figures show that the Eurozone is now officially in recession, with the economy shrinking by 0.2% in the third quarter. This follows a similar drop of 0.2% in the previous quarter.

The news was expected, with Germany - Europes largest economy - already being in recession. Since Germany is the main driving force of the Eurozone, if they have problems it pretty much guarantees that the whole region will be dragged down with it.

The European Central Bank has dropped its interest rate to 3.25% this month to try and kick - start the failing economy, but I would expect more cuts in the rat to come over the next few months, with the rate eventually dropping as low as 1.5 - 2% before this current crisis starts to abate.

It isgenerally believed that the UK is already in recession, although official figures have yet to be posted.

In spite of the gloomy news, European stock markets ended the week in positive territory.

Sterling continues to be hit hard though, with the value against the Dollar continuing to fall.

This time last year, the Pound was worth over $2 and bargain hunters were dashing across the ‘pond’ to take advantage of cheap goods in New York.

The value has now dropped to only $1.47, with investors believing that the UK will be hit hardest by the recession.

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