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While 2012 started positively following the ECB’s first LTRO (December 2011) and in expectation of a second (which duly arrived at the end of February), economic output soon started falling. The eurozone experienced a double-dip recession in Q2, while the UK’s fall in output in Q4 2011 turned out to be the start of its nine-month double-dip recession. For 2012, the eurozone GDP forecasts in the quarterly ECB Survey of Professional Forecasters fell from -0.1% in Q1 to -0.5% in Q4. More significant were the downgrades to the 2013 forecasts, from 1.1% to 0.3% in the same period. It seemed that economists had underestimated the effect of the various austerity programmes (they were much more punitive than expected) and the political determination to respond to counter the negative effects through introducing yet more programmes.
Source : AXA Real Estate
