Euro zone retail sales plummet
Figures released from Eurostat have revealed that retail sales in the euro zone fell by a record 4.2% year-on-year in March.
The fall in retail sales shows continued weakness in consumer demand with analysts not expecting an improvement in the medium-term.
According to Juergen Michels of Citigroup, the figures are disappointing and suggest that rising unemployment are having an impact on sales.
The latest figures show that 20 million people are currently out of work in the EU – this represent 8.9% of the population who are able to work – up from 8.7% in February.
In the meantime, the European Commission forecast earlier this week that EU economies will contract by 4% this year – double its forecast announced in January.
The revised forecast was prompted by the worsening of the global financial crisis and the continued fall in house prices values.
The Commission believes that the economy will not see a recovery until the latter part of 2010.
Meanwhile, the unemployment rate is expected to hit 10.9% in 2010 in the 27-nation, according to the Commission.
EU Economic and Monetary Affairs Commissioner, Joaquin Almunia, told the BBC that “The European economy is in the midst of its deepest and most widespread recession in the post-war era.”
The European Central Bank (ECB) is set to announce its decision tomorrow with regard to interest rates. In a bid to drag the area out of recession, the ECB has embarked on aggressive cuts with rates currently at a record low of 1.25%.
For some time now, economists have said that the ECB may introduce quantitative easing (also known as printing money) – a process whereby funds are injected into the financial system to ease pressure on banks by giving them extra capital.
The process has already been introduced by both the Bank of England and the US Federal Reserve, as they endeavour to stave off a prolonged recession.
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