The eurozone tipped back into recession for the second time in just three years in the third quarter, data showed yesterday, making it even harder to solve the debt crisis eating away at the bloc’s foundations.

The 17-nation eurozone economy shrank 0.1 per cent compared with the three months to June when it contracted 0.2 per cent, meeting the technical definition of a recession as two consecutive quarters of decline.

The figures made grim reading after massive protests on Wednesday across Europe against the austerity measures governments have taken to resolve the debilitating debt crisis but which many believe only undercut growth and make the problem worse.

“The data confirmed that, despite continued growth in Germany and France, the eurozone as a whole is now officially in recession. We expect the recession to deepen markedly in the coming quarters,” Capital Economics analysts said.

With an economy on the rocks and unemployment soaring as a result, governments are caught between the need to spend more on welfare just as their revenues tank, putting even more pressure on already strained finances.

They pay a heavy political price too.

In Spain, where the economy shrank 0.3 per cent in the three months to September, the UGT union said the figures showed “how the Government’s policies are sinking us in an abyss of economic depression, massive unemployment and social inequality.

“Nothing is getting better, the situation is getting worse and the Government is showing a total inability to get us out of the crisis,” said the union, which helped organise major protests on Wednesday.

Just in case the outlook was not dark enough, the European Central Bank warned yesterday that the eurozone faces an even deeper recession this year, with the single-currency economy to shrink 0.5 per cent, rather than 0.3 per cent.

Growth in 2013 will be only an anaemic 0.3 per cent, not the 0.6 per cent expected previously, an ECB survey of forecasters showed.

“The main factor behind the downward revision for 2012 was the prolonged uncertainty in the euro area, which was also reflected in weak economic indicators in summer and early autumn,” the survey said.

Adding to the problems, inflation – which requires tight policy control rather than stimulus to boost growth – will hit 2.5 per cent this year, up 0.2 percentage points, it said. (AFP)