Perilous Times
29 December 2011 Last updated at 19:39 ET
Recession 'is returning' to Europe, say economists
Government austerity has undermined growth and caused a great deal
of anger around Europe
The vast majority of leading economists polled by the BBC believe
recession will return to Europe next year.
One fifth said the eurozone would not exist in its current
17-member form, while the majority put the possibility of a
eurozone break-up at 30%-40%.
The poll also found that most economists expect UK interest rates
to remain at 0.5% throughout next year.
It was conducted among 34 UK and European economists who regularly
advise the Bank of England.
Of the 27 who responded, 25 forecast recession for Europe next
year.
Closer union
Growth in Europe has slowed in recent months as the eurozone debt
crisis has forced governments to rein in spending and has
undermined confidence in global financial markets.
The eurozone economy grew by 0.2% between July and September,
while the 27 economies of the European Union grew collectively by
0.3%.
Politicians have attempted to resolve the crisis, including an
agreement to forge closer ties between EU members, but markets
have yet to be convinced the measures they have taken are
sufficient.
The longer the debt crisis rumbles on, the more likely Europe will
return to recession, economists believe.
'Deficit pain'
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Growth in the UK during the third quarter was 0.6%. However,
growth in the previous three months was flat.
The CBI business group said that 2012 could be the beginning of a
more prosperous future if the "pain" of deficit reduction passed
quickly.
In his New Year message, the CBI's John Cridland said the eurozone
crisis posed a "significant threat" to the British economy,
because 40% of UK exports were sold there.
Mr Cridland added that the faltering recovery and the continuing
debt crisis were stark reminders of the need to rebalance
Britain's economy away from household and government debt.