Eurozone recession looming, as debt costs soar

The statistics did not include any data for Italy, Ireland, Greece, Malta, Luxembourg and Slovenia. But with dim economic forecasts by the EU, IMF and other international bodies, the eurozone seems to be heading towards a new recession, as people's incomes have been slashed by austerity measures, resulting in depressed consumption.

And despite the new 'technocratic' prime ministers in Greece and Italy, markets have continued to drive their borrowing costs up and have started to dump even triple-A-rated bonds from France, Austria, Finland and the Netherlands.

The premium paid by France and Austria compared to German bunds - the reference bond for traders - rose to a record of 192 and 184 basis points, respectively, above the threshold normally associated with triple-A countries. Belgium's AA+/Aa1 rating may also soon be downgraded as its bond spread over German debt reached a record of 314 basis points.

Italy's borrowing costs continue to stay high, with yields at seven percent for the second time in a week - a level deemed as bail-out territory. Spain also entered the danger zone, as its premium compared to Germany hit 482 basis points, above the 450 rate Irish and Portuguese yields reached before asking for an EU-IMF bail-out.

Finland and Dutch bonds also saw their premiums rise to 17 and 10 basis points, respectively, while Germany's premiums continue to fall, with ten-year yields now at 1.77 percent.

Acknowledging the bleak growth situation, EU Council chief Herman Van Rompuy on Tuesday claimed that the slow-down "is on average not due to fiscal consolidation." Instead, he blamed investors for "lack of confidence", as well as consumers and said that running large deficits "can therefore not be the answer to the current situation."

"We must be aware that public anxiety in Europe is mounting about the immediate economic and financial situation. People are growing concerned about their jobs, their savings and the future of their children. These concerns are legitimate and Europe needs to be responsive," he said.

But in terms of solutions, he came up with the same EU policies that have so far failed to spur growth and "reverse the vicious circle" - the EU's 2020 Agenda (a ten-year economic growth plan), the 'six pack' of economic rules aimed at tightening budget surveillance ,and using EU funds to spur growth.