Daily commentary: Europe is in a double dip recession

The news from Spain's statistical agency INE is that the Spanish economy shrank 0.3% in the first quarter of 2011. Spain thus joins ten other Western European economies in recession, all of them in the euro zone except the UK. The list is the UK, Greece, Italy, Portugal, Ireland, Belgium, Denmark, the Netherlands, Czech Republic, and Slovenia. What this tells you is that austerity, official policy in the UK and the euro zone to fight government deficits, is contractionary by nature.

None of this should come as a surprise. Given the policy response, I am surprised it took as long as it did to move to recession. I predicted as much fully two years ago. And I told you already in October that Europe was likely already in recession. My worry then as it is now is the banking sector and debt d...


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