Headache: ECB’s Christine Lagarde Lagarde
The eurozone looks set to fall into recession after the economy suffered its worst month since the depths of the Covid-19 pandemic.
In a gloomy report, S&P Global said the so-called purchasing managers’ index of business activity in the single currency bloc fell to 46.5 in October.
That was down from September’s 47.2 and well below the 50 threshold between growth and contraction.
It was the weakest reading since November 2020, when Covid-19 restrictions were in place across much of the continent.
Activity fell in France, Germany and Italy, while Spain only managed a score of 50, suggesting stagnation.
Analysts warned that economic output in the eurozone could fall again in the current fourth quarter of the year, after having declined 0.1 percent in the third.
That would leave the single currency bloc in recession.
The report represents a headache for the European Central Bank and its leader Christine Lagarde.
There are fears that the aggressive nature of the ECB’s interest rate hikes will push the economy into recession, raising questions about its handling of the economy.