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Europe today finds itself between Scylla and Charybdis: after the intervention to hit historic inflation through the ECB raising interest rates for the first time in more than a decade, Europe now faces another risk: recession.
New data from key businesses show a contraction in eurozone economic activity. The fact that for the first time since the beginning of 2021, the activity in the private sector of the Eurozone has decreased, this is also due to the harsh measures against the pandemic, the impact of which continues to be felt, is seen with concern.
Business expectations are also down for the period ahead, falling to levels rarely seen during the past decade.
Problematic, the picture appears especially for the largest economy of the eurozone, Germany, where economic activity has recorded the lowest levels in the last 25 months.
“It’s going to get worse,” is the gloomy forecast implied by the assertions of Chris Williamson of S&P Global, who speaks of “shrinking new orders, and a pessimism of businesses” which he says show that the situation has worsened .
The European Central Bank raised interest rates this week by 0.5 percentage points in an attempt to stop rampant inflation.
However, the current situation is not easy for the supervisors of the euro, who on the one hand have to normalize the monetary policy, but on the other hand, if they brake too hard, they stifle the economy.
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