Europe Economy Shrinks in 2nd Quarter

Posted August 14th, 2012 at 10:25 am (UTC-5)
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Europe is edging closer to a recession, with its economy shrinking from April to June, after a stagnant first quarter of the year.

The European Union said Tuesday that the economies of both the 17-nation euro currency union and the broader bloc of 27 EU nations contracted by two-tenths of a percent in the second quarter compared to the earlier months of 2012.

Germany — with the eurozone's strongest economy — grew by a stronger-than-expected three-tenths of a percent in the second quarter, but the on-going governmental debt crisis has pushed seven other currency bloc countries into recession.

France posted its third consecutive quarter with stagnant growth. The country's central bank said last week it expects the economy to shrink slightly between July and September.

Most European governments have imposed unpopular spending cuts in an effort to reduce burgeoning deficits. But the austerity measures have curbed economic growth.