Eurozone Sees First Slump; Germans Lead Decline

For the first time in a decade the vaunted union of 15 nations sees a collective dip
By Jim O'Neill,  Newser User
Posted Aug 14, 2008 7:27 AM CDT
A DaimlerChrysler employee takes a Mercedes star, the emblem of Mercedes cars, to be mounted on the hood of a Mercedes automobile at the factory in Sindelfingen, southern Germany.   (AP Photo/Thomas Kienzle)
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(Newser) – The eurozone economy contracted 0.2% in the second quarter, the first time the 15-nation union has seen negative growth since it was formed a decade ago, reports the Guardian. The group of countries that share the euro saw 0.7% growth in the first quarter but were hurt this time by economic downturns in Germany, France, Italy, and Spain.

Germany’s economy—the largest in Europe—contracted 0.5% as the rising euro cut into its exports and inflation hurt spending at home. France saw a decline of 0.3% and economists are predicting another negative quarter on the way. "The figures are disastrous,” says one analyst. “The economy is being hit on all fronts.” The European Central Bank recently increased borrowing rates to 4.25% to combat inflation.