Tuesday’s flash estimate of eurozone GDP in the second quarter underlines Ernst & Young Eurozone Forecast’s assessment that the slowdown has spread from the periphery into the core.

“Positive readings in Germany and the Netherlands are to be welcomed, but with conditions in the rest of Europe deteriorating further and export markets further afield also cooling, it is looking increasingly likely that output in the core economies will contract during the second half of the year,” Tom Rogers, senior economic adviser to EEF said.

“Decisive action at the national and European level is needed to restore confidence and avoid a slide towards a much deeper recession. Germany could use some of its fiscal space to boost demand at home, spilling over those economies where the priority is to underpin public finances.

“Reform efforts in the periphery can yield immediate improvements in business and investor confidence, so these must remain a priority.”

Mr Rogers added that the ECB’s recent announcement that it will do “whatever it takes” to save the euro is welcome, but clarity over what will be done is crucial, particularly with financing requirements for Italy and Spain picking up again sharply in October.