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20th Mar 2023

Eurozone facing unprecedented triple-dip recession, warns Cameron

  • (Photo: Number 10)

The eurozone is on the 'brink' of an unprecedented triple-dip recession, UK prime minister David Cameron warned as the weekend's G20 summit in Australia came to its conclusion on Sunday (16 November).

In an article in the Guardian published Sunday (16 November), Cameron said that the "eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too".

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The UK was already feeling the "impact of the eurozone slowdown on our manufacturing and our exports," he added.

The eurozone economy grew by 0.2 percent in the third quarter of 2014, according to data published on Friday (14 November) by Eurostat, fractionally below the 0.3 percent across the 28-country bloc, having recorded zero growth in the three months between April and June.

Germany and France, the eurozone's two largest economies, have achieved sluggish growth so far this year, while Italy has fallen back into recession.

In total, the currency bloc is expected to expand by a meagre 0.8 percent this year followed by 1.1 percent in 2015.

The US and the UK have performed much stronger over the past twelve months, expanding by between 2 and 3 percent.

Cameron's comments came at the conclusion of the weekend's G20 summit in Brisbane which focused on the role of trade and investment in overcoming the economic woes facing much of the G20.

In the final communique, leaders set themselves a target to increase the G20’s GDP by at least an additional two per cent by 2018.

A Global Infrastructure Initiative, aimed at increasing public and private infrastructure investment lay at the heart of the measures agreed by leaders. However, the emphasis is more on private than public money. Leaders want to encourage institutional investors and greater private sector lending, alongside a bigger role for national and international development banks.

A similar plan is expected to be unveiled in Brussels in early December when European Commission president Jean-Claude Juncker is expected to flesh out his flagship €300 billion investment programme for the EU. Commission officials have indicated that the programme will be based almost exclusively on private sector funding and funds leveraged by the European Investment Bank.

Meanwhile, the European Central Bank has begun new bond and securities programmes to increase the size of its balance sheet and hopefully stimulate more bank lending and business activity.

Trade talks

Leaders also called for an acceleration of the trade talks between the EU and US, which they hope to conclude next year, reaffirming their "commitment to comprehensive and ambitious negotiations"

The leaders of Germany, France, the UK and Spain held talks with US president Barack Obama in the margins of the summit after which David Cameron commented that he "sensed an enthusiasm" from the Americans to do a deal.

For her part, Germany's Angela Merkel urged the EU to negotiate in a "speedy and determined" way with the US to complete the trade deal.

Trade officials have already concluded seven rounds of talks in Brussels and Washington DC and are hopeful of wrapping up an agreement in 2015.

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