The credit rating agency has cut its forecasts for the region, predicting a contraction of 0.8pc this year, down from the 0.7pc shrinkage it had expected as recently as July, and stagnation in 2013, compared with the 0.3pc expansion it was predicting.
Jean-Michel Six, S&P’s chief economist for Europe, the Middle East and Africa, warned of what he said was a “bleak picture for Europe”.
“The data are confirming our view that the region is entering a new period of recession, after three quarters of negative or flat growth since the final quarter of 2010,” he said.
Mr Six said the growth prospects of individual countries would “continue to vary” as S&P forecast that some countries would see a marked decline in the size of their economies.
For 2013, S&P is predicting the Spanish economy will contract by 1.4pc in 2013, more than double the 0.6pc decline it was expecting in its previous forecast.
“We forecast another year of very weak growth in 2013 in France and the UK, and further declines in output in Italy and Spain,” said Mr Six.
The impact of the slowdown in southern Europe is beginning to damage even the strongest eurozone countries. The respected IFO survey on business conditions in Germany for September showed sentiment for falling for the fifth month in a row, leading to fears that the country could be heading into recession.
Economists had expected a slight rise in the country’s business confidence but the drop suggests the German economy could have shrunk in the third quarter.
Mr Six blamed the downturn on the deleveraging process taking place across the public and private sectors in the eurozone as banks, companies and governments attempt to reduce the size of their debt.
Telegraph
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