Euro zone set for record recession
Video Credit: Reuters Studio - Duration: 01:54s - Published 1 hour ago Euro zone set for record recession Business activity across Europe almost ground to a halt last month as government-imposed lockdowns to stop the spread of the coronavirus forced factories, shops and restaurants to close and many leisure activities to cease, a survey showed. Francis Maguire reports.

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Euro zone set for record recession

The euro zone economy will contract at a record pace of 7.7% this year.

Inflation will almost disappear, while public debt and budget deficits will balloon.

That was the forecast from the European Commission on Wednesday (May 6).

European Commissioner for Economic and Financial Affairs Paolo Gentiloni "All EU Member States are forecast to endure a severe recession this year.

Economic activity in Greece, Italy, Spain, Croatia and to a lesser extent France are forecast to contract the most." The Commission warned stimulus efforts to keep economies going will raise budget deficits in the euro zone to around 8.5% of GDP this year.

While the Commission does see growth and recovery next year, the surge in public debt will take longer to undo.

It predicts debt will jump to almost 103% of GDP this year, with southern Europe worst hit.

Data released Wednesday showed service industries collapsed across Europe.

Italy saw its weakest performance in 22 years, German service providers saw their worst ever showing and France also saw an unprecedented collapse.

PMI data from all over the euro zone showed business activity ground to a halt in April.

In Europe's powerhouse Germany, orders for industrial goods fell in March at their steepest rate since records began in 1991 Germany is facing its deepest recession since World War Two, despite recent moves to ease their lockdown measures.

Foreign and domestic orders for goods slumped 15.6% on the month, far worse than the 10.0% drop forecast analysts predicted.

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Euro zone set for record recession