Eurozone Economy Barely Advances in Third Quarter

Posted November 15th, 2011 at 11:50 am (UTC-5)
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The eurozone economy barely advanced in the July-to-September period, weighted down by the financial woes in debt-ridden Greece and Italy.

The European Union said Tuesday that the economy in the 17-nation bloc that uses the euro currency expanded just two-tenths of one percent in the third quarter, largely supported by bigger growth in the continent's two biggest economies in Germany and France. But the Greek economy retracted by 5.2 percent in the quarter, while economists think Italy may also have slipped into a recession.

Stocks fell on major exchanges in London, Paris and Frankfurt as investors continued to worry about the ability of fledgling coalition governments in Athens and Rome to adopt unpopular austerity measures to control deficits and pay back long-term debts.

Greek government workers staged a protest march through Athens on Tuesday against planned wage cuts on top of earlier salary cuts. More demonstrations are planned for later in the week.

The president of the Confederation of Civil Servants, Kostas Tsikrikas, said that Greek government workers are not lazy, and deserve more respect.

The Greek Parliament is preparing for a confidence vote Wednesday on the caretaker government of its new prime minister, Lucas Papademos, and analysts say he is expected to prevail. Greek financial leaders are set to meet Friday with members of the International Monetary Fund, European Central bank and the EU in an effort to secure release of Greece's next next $11 billion loan installment to keep it from defaulting next month on its international obligations.

In Rome, prime minister-designate Mario Monti won crucial support from Italy's two main political groups as he moved to name his Cabinet. He said Monday he wants the government to stay on until 2013, the scheduled date for new elections, even as some Italian lawmakers are calling for earlier elections.

The government's debt woes put new pressure on Mr. Monti to move quickly to name government leaders, with the country's interest rate on its debt again topping 7 percent on Tuesday. That is the threshold that forced Greece, Ireland and Portugal to seek international bailouts.

The EU said Germany's economy expanded by one-half of one percent in the third quarter, buttressed by increased household spending and by businesses investing in machinery and new equipment. The French economy advanced by four-tenths of a percent.