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Europe's battered economy continues headlong decline

Simon English
15 May 2009


The crisis in the German and French economies has deepened in the last three months.

Figures out today show that gross domestic product in Germany slumped by 3.8% during the first quarter, a steep decline on an already rough situation.

Germany fell into recession in the final quarter of 2008 when the economy shrank 2.2%.

Today's numbers are even worse than most professional predictions.

The government is injecting �82 billion (£73 billion) to stem the worse recession since Second World War.

German unemployment rose for the sixth straight month in April taking the jobless rate to 8.3%.

Simon Junker at Commerzbank in Frankfurt said: "It will probably take several years before we completely make up for the contraction of the past quarters."

The government insists there is evidence to suggest the decline is slowing. Manufacturing orders rose in March and business confidence has rebounded from a 26-month low.

The European Central Bank cut interest rates to 1% last week.

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