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Oct. 4 (Bloomberg) -- The prospect of a recession in Europe next year is growing as turmoil in financial markets and a slowing U.S. economy curbs growth in the region, Standard & Poor’s said in a report.
Economic expansion in the euro region will slow to 1.1 percent in 2012, S&P forecast in a report today, down from an August forecast of 1.5 percent. The forecast for the U.K. growth rate was cut to 1.7 percent from 1.8 percent.
“The prospect that Europe might dip into recession again is looking more likely,” Jean-Michel Six, S&P’s chief economist for Europe wrote. “We still do not expect a genuine double dip to occur in the eurozone as a whole or in the U.K., but we recognize that the probability of another recession in western Europe has continued to grow.”
The likelihood of a recession next year is 40 percent, the report said, as surveys show a slowdown in manufacturing and service sectors since the second quarter is combining with a worsening European debt crisis and slowing U.S. economy. Lower- than-expected growth in emerging markets or a rise in long-term interest rates will make a recession more likely, S&P said.
--Editors: Michael Shanahan, Cecile Gutscher
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