Europe suffers worst crisis since WW2 as France plunges into recession and Spain’s economy collapses

EUROPE is suffering its worst financial crisis since World War II as France and Italy plunge into recession and Spain's economy collapses.

The coronavirus pandemic has killed tens of thousands across the continent and wrought economic havoc as whole countries were locked down.

⚠️ Read our coronavirus live blog for the latest news & updates

Business activity from hotels and restaurants to construction and manufacturing has been frozen by shutdowns aimed at preventing the bug’s spread.

And the latest figures today show the European economy shrank by a record 3.8 per cent in the first quarter of the year.

The drop in the 19-country Eurozone was the biggest since statistics began in 1995.

It was even sharper than the plunge seen in the depths of the 2009 global financial crisis, after the bankruptcy of US investment bank Lehman Brothers.

Germany – Europe's largest economy – has already shrunk by 1.9 per cent in the first three months of 2020 and is expecting a 12.2 per cent contraction in the second quarter.

ECONOMIC BATTERING

Forecasts by the country’s Economy Ministry due to be presented next week will show the slump is predicted to be the worst since just after World War II in 1950, Bloomberg reports.

France and Italy are now both officially in recession after two consecutive quarters of economic contraction.

The French economy shrank 5.8 per cent – the most since the country’s statistics agency began keeping the figures in 1949 – while Italy’s contracted by 4.7 per cent.

WORSE TO COME

Spain too took a battering, with its economy shrinking by 5.2 per cent in the first quarter – its worst reading since records began in the early 1990s.

The drop doesn’t put the country in a technical recession – it grew slightly in the final quarter of 2019.

And the economic situation in Europe is likely even worse than today’s numbers suggest.

Lockdown measures were mostly put in place only in March – the last of the three months in the quarter.

That means the statistics for the second quarter in three months’ time will almost certainly be even more disastrous.

Unemployment figures could also be masking a terrible reality, it’s feared, after showing only a slight rise to 7.4 per cent in March from 7.3 per cent in February.

Millions of workers are still being supported by temporary programmes under which governments pay most of their salaries in return for companies agreeing not to lay people off.