Eurozone Slips Back Into Recession

The economic news in Europe just keeps getting worse: The eurozone, the 17 countries that use the euro currency, has slipped back into recession.

Eurostat, the European Union's statistical agency, said Thursday that the bloc contracted 0.1 percent in the third quarter; it shrank 0.2 percent in the second quarter.

A recession is often defined as two consecutive quarters of negative growth.

Here's more from the agency:

"Compared with the same quarter of the previous year, seasonally adjusted GDP fell by 0.6% in the euro area and by 0.4% in the EU27 in the third quarter of 2012, after -0.4% and -0.3% respectively in the previous quarter."

EU27 refers to the 27 states that make up the European Union. Ten of those states still use their own currencies.

The eurozone was last in recession in 2009. The bloc's economy shrank for five consecutive quarters in that period.

"This was totally expected because of austerity policies combined with world growth slowing down and a dramatic fall in activity in Germany and the Netherlands," said Steen Jakobsen, chief economist at Saxo Bank. "The last couple of days have created a new momentum for a major change in policy input, because up until this week, social tension was not part of equation. It seems like the tone has shifted dramatically."

His comments were reported by the BBC.

Still, European markets closed broadly lower on the news.

Larry Elliott, economics editor for The Guardian, warns that more economic contraction is likely.

"Greece has just signed up to another batch of spending cuts, the Spanish economy is in freefall and Germany will continue to struggle all the while world trade remains weak. European banks remain in a parlous state and would go under without life support from the European Central Bank and national governments. The first half of 2013 will be grim."