First it was Standard & Poor’s, then a fleet of private economists; finally it was the IMF delivering the bad news that everyone knows: developed Europe is in trouble and the various economies are sliding towards a new recession.
At the end of a week that was dominated by the financial crisis over Greece and the health of the eurozone’s banks, the forecasts made gloomy reading.
But not at the European Central Bank which left its key interest rate unchanged in a surprise decision marking the last meeting of departing head, Jean Claude Trichet.
But the ECB did move to help the eurozone banks by announcing a further extension of its policy of providing unlimited liquidity, saying it would include 12-month loans this month and 13-month loans from December that will bridge two crucial year-end periods when banks are keen to show strong financial figures.
In London the Bank Of England added 75 billion pounds to its 200 billion pounds of quantitative easing to try and help a sagging UK economy.
The central bank will buy the extra Government bonds over the next four months.
It singled out slowing economies in Europe, the sliding domestic economy, especially consumer demand (See below) and the growing strains in bank funding.
Both moves helped stockmarkets in London, Germany, Paris and Italy rise by well over 3%, with US markets up more than 1%.
That was after Asian markets, led by Australia and Hong Kong (two of the biggest fallers) charged higher in a bullish day’s trading on Thursday.
The Europeans, led by Germany and now talking about providing financial help to banks to handle, in the last resort, mind you, to handle the impact of sovereign debt write-downs (Greece certainly, Italy and Spain and Portugal?).
And, with the US economy stumbling along at stalling speed, much of the global economy faces a stuttering end to 2011 and a hesitant start to 2012.
Europe, rather developed Europe, which is really the countries of the eurozone plus the UK, are the basket cases of the developed world, a situation that will endure for most, if not all of 2012.
The UK is especially interesting: it seems to have slowed more sharply than other parts of the region (excluding Greece and other bailout countries).
The Conservative/Lib Dem government of Prime Minister David Cameron cuts spending to rebalance the budget and reduce debt over the next five years, it is faced with the unpleasant fact that the economy has all but stalled.
The country’s Office of National Statistics says gross domestic product grew by just 0.1% in the second quarter, compared to the first three months of the year, down from a previous estimate of 0.2%.
And, GDP growth in the first quarter was revised down to 0.4% from 0.5%.
Given the 0.5% contraction in the last quarter of 2010, the new figures revealed that the economy has flatlined for the past nine months.
And the Office has revised the size of the slump in 2008-09 to 7.1% between March 2008 and its end in June 2009, making the recession deeper than the previous estimate of 6.4%, but three months shorter than previously estimated.
And the revisions also show that the UK economy is still smaller than it was before the GFC hit: GDP was 4.4% smaller than its peak in the March quarter in 2008.
The Office said weaker growth, particularly in the second quarter, reflects a range of pressures, including continued falls in real wage growth, an uncertain labour market, relatively high inflation rates, and volatility and weakness in financial markets.
A feature of the latest UK figures is the sharp slowdown in consumption of essentials, such as foodstuffs.
In fact UK household spending on essentials has fallen to its lowest level in almost a decade and the amount they spent on groceries, petrol and other day-to-day items has shrunk for a whole year, official figures showed.
Total spending on food was £18.6 billion, the lowest quarterly figure since the spring of 2002 with some of the difference was due to shoppers swapping premium brands for cheaper products and own-brand lines. Petrol sales and spending on other forms of transport slumped to a level last seen in early 2000.
And more of the same lies ahead as consumers and the Government cut back.
In its reaffirmation of the UK’s AAA credit rating this week, Moody’s said "we expect the U.K. will post relatively modest growth rates of around 1.8% on average in 2011-2014, lower than the 2.5% forecast by the Office for Budget Responsibility.
That could very well mean that the UK economy will not regain that March, 2008 peak until 2013-14.
The latest IMF forecasts showed a sharp slowdown in economic activity across Europe since the second quarter.
The IMF is now expecting growth of 2.3% this year – down from 2.4% last year – and is looking for just 1.8% growth in 2012, with much of that coming from what the Funds calls emerging Europe, where growth is forecast to rise slightly this year to 4.4% from 4.3%.
The IMF said in its regional outlook for Europe:
"Following a strong showing in early 2011, the economies across Europe now face the prospect of a pronounced slowdown, as global growth has softened, risk aversion has risen, and strains in Europe’s sovereign debt and financial m
