Photo by stuartpilbrow

Today, the Wall Street Journal reported that the European Union is officially in recession. The EU, which makes up 15 countries in Europe, just completed their 2nd straight quarter of GDP decline, which officially puts them in a recession under the economic definition. This is the first time that the currency area of the euro-zone had two consecutive contracting outputs sense it began in 1999.

Specifically, Ireland, Germany, and Italy, some of the largest EU members have fallen into recession. The news could spark increased interest rate cuts, and could even affect the US.

Since the US and Europe are so heavily linked in the western world, and some might argue that the credit crunch in the US is much stronger than that in Europe, it would be hard to see how this couldn’t be a precursor to what’s to come in the US.

European politicians had insisted the currency area would be relatively unaffected by the credit crunch, which they saw as chiefly a U.S. problem. However, the euro zone has preceded the U.S. in entering a recession.

So far, the response of the European governments has not been as substantial as the US or Chinese, and hopefully that has been enough to fight off what has happened to our friends on the other side of the Atlantic.

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Tags: Economy, europe, recession