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-	Italy has moved to centre stage in the eurozone debt crisis.	+	Two of the eurozone's biggest economies have fallen into recession, according to the latest economic figures.
-	While Greece generated a lot of noise, it is now seen as a sideshow.	+	Italy and the Netherlands both saw their economies shrink by 0.7% in the fourth quarter, the second consecutive quarter of economic contraction.
-	Greece's debt problems are already widely known and the immediate consequences of a Greek default largely anticipated.	+	Germany had its first negative quarter since 2009 with a decline of 0.2%, compared with the previous quarter.
-	Moreover, the size of the Greek economy is small enough that the direct damage, if Greece stopped paying its debts, should be quite manageable for the eurozone.	+	But in France there was surprise growth of 0.2% at the end of last year, attributed to healthy export growth.
-	Instead, the big fear is "contagion" - that a Greek default could trigger a financial catastrophe for other, much bigger economies - in particular Italy and Spain.	+	Overall the 17 nations that make up the eurozone saw economic activity shrink 0.3% in the fourth quarter. By comparison the United States reported growth of 0.7%.
		+	Continue reading the main story
		+	�Start Quote
-	And it seems it is Italy that is now seen as the lead candidate for that contagion. But why is this?	+	Greece may be burning. Growth may be slowing. But the recognised German barometer of hope over fear shows far more Germans looking on the bright side than those down in the dumps�
-	Prudent Italy?	+
-	According to Germany's Chancellor, Angela Merkel, "Italy has great economic strength, but Italy does also have a very high level of debt and that has to be reduced in a credible way in the years ahead."	+	End Quote
		+	image of Stephen Evans Stephen Evans BBC News, Berlin
-	As with Greece, she and other eurozone leaders believe the solution is more government austerity - spending cuts and tax rises - by Rome.	+	* Germany: Reasons to be cheerful
-	However, some economists might disagree with her assessment.	+	The eurozone has not slipped into recession as it reported growth of 0.1% in the third quarter.
		+	'Better than feared'
-	The Italian government's debt, at 118% of GDP (annual economic output) is certainly high, even by European standards.	+	For 2011 as a whole, the French economy grew by 1.7% and Germany 3%.
-	But dig a little deeper, and the picture changes.	+	Europe's debt crisis has already pushed Greece, Portugal and Belgium into recession, defined by two consecutive quarters of contraction.
-	Unlike their counterparts in Spain or the Irish Republic, ordinary Italians have not run up huge mortgages, and generally have very little debt.	+	Economists forecast that Germany is likely to avoid that scenario and say the latest growth figures could have been worse.
-	That means that according to the Bank of International Settlements Italy as a country - not just a government - is not actually terribly indebted compared with other big economies such as France, Canada or the UK.	+	"This is better than feared after retail sales and industrial production turned out badly in December. The decline is due to the euro crisis. It caused a drastic loss in confidence among companies and consumers." said Christian Schulz, an economist at Berenberg Bank.
-	Continue reading the main story	+
-	Crisis jargon buster	+
-	Use the dropdown for easy-to-understand explanations of key financial terms:	+
-	GDP	+
-	GDP	+
-	Gross domestic product. A measure of economic activity in a country, namely of all the services and goods produced in a year. There are three main ways of calculating GDP - through output, through income and through expenditure.	+
-	Glossary in full	+
-	Moreover, the large debts of the Italian government are nothing new. It has got by just fine with a debt ratio over 100% of its GDP ever since 1991.	+	"Action from the ECB and the government has restored confidence. There is hope that we will emerge quickly from the economic dip. We expect growth again in the second quarter at the latest, provided that the euro crisis remains under control." he said.

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Revision as of 07:45, 30 January 2013

Two of the eurozone's biggest economies have fallen into recession, according to the latest economic figures.

Italy and the Netherlands both saw their economies shrink by 0.7% in the fourth quarter, the second consecutive quarter of economic contraction.

Germany had its first negative quarter since 2009 with a decline of 0.2%, compared with the previous quarter.

But in France there was surprise growth of 0.2% at the end of last year, attributed to healthy export growth.

Overall the 17 nations that make up the eurozone saw economic activity shrink 0.3% in the fourth quarter. By comparison the United States reported growth of 0.7%. Continue reading the main story �Start Quote

   Greece may be burning. Growth may be slowing. But the recognised German barometer of hope over fear shows far more Germans looking on the bright side than those down in the dumps�

End Quote image of Stephen Evans Stephen Evans BBC News, Berlin

   * Germany: Reasons to be cheerful

The eurozone has not slipped into recession as it reported growth of 0.1% in the third quarter. 'Better than feared'

For 2011 as a whole, the French economy grew by 1.7% and Germany 3%.

Europe's debt crisis has already pushed Greece, Portugal and Belgium into recession, defined by two consecutive quarters of contraction.

Economists forecast that Germany is likely to avoid that scenario and say the latest growth figures could have been worse.

"This is better than feared after retail sales and industrial production turned out badly in December. The decline is due to the euro crisis. It caused a drastic loss in confidence among companies and consumers." said Christian Schulz, an economist at Berenberg Bank.

"Action from the ECB and the government has restored confidence. There is hope that we will emerge quickly from the economic dip. We expect growth again in the second quarter at the latest, provided that the euro crisis remains under control." he said.