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Eurozone meltdown: Record slump sparks panic as France and Italy hit by huge blow

Merkel warned by expert: Recovery plan ‘won’t fix’ Eurozone

And separate figures have indicated the total unemployment rate within the 19 countries which are members of the monetary union remains at 8.3 percent.  The figures, published by Eurostat, which provides statistical information to the institutions of the European Union, reveals the eurozone economy suffered a 0.7 percent GDP contraction in the final quarter (Q4) of 2020.

Factoring in the record quarterly contraction of 11.7 percent in Q2 and the strong 12.4 percent rebound in Q3, the net result is an annual GDP contraction of 6.8 percent for 2020 as a whole.

As such, it far outstrips the previous record yearly contraction, 3.7 percent, recorded at the height of the global financial crisis.

Sam Miley, an economist with the Centre for Economic and Business Research (CEBR), said: “The downtick in economic output in Q4 reflects the widespread reimplementation of COVID-19 contain measures across the continent, though does mask varying degrees of restriction severity across member states.

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“This downward pressure on economic output looks set to continue in early 2021 due to the clampdown on new, more virulent strains of coronavirus, while subdued economic activity could continue for an even more protracted period in light of the eurozone’s relatively slower rollout of vaccinations.”

CEBR’s accompanying report suggested the drop in economic output in Q4 reflected the widespread reimplementation of COVID-19 containment measures across the continent as the second wave hit.

Specifically, many countries had opted to reimpose lockdown restrictions, curtailing the activity of both consumers and businesses.

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Nevertheless, there was some variation in restrictions across countries, resulting in corresponding variation in quarterly output changes.

For example, among member states for which fourth quarter data was available, the biggest contractions were recorded in Austria and Italy, with output declining by 4.3 percent and two percent, relative to Q3.

Significantly, they were the two eurozone countries with the most stringent lockdown measures in Q4, according to the Oxford COVID-19 Government Response Tracker (OxCGRT).

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Conversely, Latvia and Lithuania were generally acknowledged to have had loosest restrictions during the final quarter of the year, resulting in their economies actually expanding slightly, by 1.1 percent and 1.2 percent respectively in the final quarter

Both France and Germany had tighter-than-average restrictions, resulting in a 1.3 percent contraction for the former and an expansion of just 0.1 percent for the latter.

The report also suggested the EU’s sluggish vaccine rollout would also have an impact on how quickly it recovered.

The authors warned: “Though mass vaccination should facilitate the phasing out of restriction measures, the fact that rollout is currently slower in the eurozone suggests that the economic benefits will be somewhat less pronounced than elsewhere.

“This is reflected in the most recent CEBR forecasts which, although pointing to an annual growth rate of 5.1 percent across both the eurozone and the UK in 2021, show considerable divergence from 2022 with the former set to grow by just 2.7 percent compared to 6.6 percent for the latter.

“Indeed, the extent to which the eurozone could suffer from a prolonged period of subdued economic activity is further highlighted by our full year GDP forecasts, which suggest that output in the eurozone will not exceed the levels seen in 2019 until the mid-2020s.”

The UK is not, nor has it ever been, a member of the eurozone, of which many Brexiteers have been sharply critical.

Speaking to last year, former Brexit Party MEP Rupert Lowe said: “When I stood for the Referendum Party in 1997 I was absolutely convinced that we had to keep the pound.

“I believed that that was the right decision and it has been proved to be right by the passage of time.

“All the same people who were saying we had to remain in the European Union were saying we had to sign up for the euro.

“One thing I am absolutely certain of is that the euro will descend into smoking heap of rubble at some stage.”

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