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S&P; says 40% chance of EU double dip

Tuesday 4 October 2011 – by Will Henley

Europe is facing a 40 per cent chance of enduring a double dip recession, according to leading credit rating agency Standard & Poor’s.

In a report issued on Tuesday morning entitled ‘The spectre of a double dip in Europe looms larger’, the firm cites a slowdown in growth in the US and worsening business sentiment across the continent.

For the second time in five weeks, the agency has revised downward its projections for economic growth for the next fifteen months. GDP growth in the eurozone is now forecast at 1.1 per cent in 2012, next to an earlier 1.5 per cent projection.

Jean-Michel Six, Standard & Poor’s chief economist for Europe, said: “We still don’t expect a genuine double dip to occur in the eurozone as a whole or in the UK, but we recognise that the probability of another recession in western Europe has continued to grow.

“We now estimate the probability of a new recession in western Europe next year at about 40 per cent, although in our baseline forecast we continue to anticipate sluggish and unevenly distributed growth in the coming five quarters.”

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