European economy shrank by a record 3.8% in Q1

Marco Green
April 30, 2020

The drop compares to a 4.8% contraction in the USA during the first quarter as the shock from the outbreak hits economies around the world.

"These were the sharpest declines observed since [the] time series started in 1995", the European Union statistics office said in a statement.

The drop in the 19-country eurozone was the biggest since statistics began in 1995 and sharper than the plunge in the midst of the global financial crisis in the first quarter of 2009 after the bankruptcy of USA investment bank Lehman Brothers.

While spillover effects from the spread of the virus in Asia likely dented the eurozone economy in the first half of the quarter, it was not until the final weeks of the period that countries initiated sweeping lockdowns created to contain the spread of the virus. Compared with the first quarter of 2019, the fall was 2.7%. Non-essential shops were closed and many factories shut down. "This was only with roughly two weeks of lockdown and supply chain disruptions", he said in reference to the first quarter data.

"This time it really is different - a recession like the one we're now in is unprecedented".

That decision may not come on Thursday but markets are awaiting an assessment from bank head Christine Lagarde.

France officially fell into recession on Thursday after recording its steepest drop in quarterly GDP since records began in 1949.

The slump is only expected to deepen in the second quarter, given much of the region has been in lockdown for the whole of April.

Separately, Eurostat said euro zone unemployment, a lagging indicator which reflect changes in the economy with a delay, ticked up to 7.4% of the workforce in March from 7.3% in February.

Oscar Williams-Grut contributed reporting.

Other reports by Click Lancashire

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