Eurozone set for steep rate cut

The European Central Bank is set to deliver a sharp cut in interest rates, as data confirms that the 15 countries that use the euro are in recession.

The central bank is expected to cut rates from 3.25% to 2.75% or lower to revive growth in the eurozone.

Eurostat, the EU's statistics office, said the eurozone's economy shrank by 0.2% in the July-to-September period, confirming an earlier estimate.

It is the first time the currency bloc has suffered a recession.

The third-quarter figure follows a 0.2% contraction in the previous quarter, from April to June.

Two quarters of negative growth define a technical recession.

Rates cut

Sweden's Riksbank has cut its key interest rate by a record 1.75 percentage points to 2% - the latest central bank to slash interest rates in an attempt to kick-start growth and prevent a protracted recession.

And Bank of England policymakers have cut UK rates to their lowest level for more than half a century, with a one-point reduction to 2% - a level not seen since 1951.

The eurozone's biggest and third-largest economies - Germany and Italy - are in recession, although France, the second-biggest, missed that fate by a slim margin. It grew 0.1% in the third quarter.

Eurostat said that the economy shrank because of a fall in investment and exports.

The European Commission has unveiled an economic recovery plan worth 200bn euros (£170bn), which it hopes will save millions of European jobs.

France is expected to detail a spending package worth 25bn euros later.

The member states of the eurozone are France, Italy, Germany, Belgium, the Irish Republic, the Netherlands, Luxembourg, Spain, Portugal, Slovenia, Malta, Greece, Austria, Finland and Cyprus.

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