Europe, Global Economy | featured news

Leaders resumed talks on a trillion-euro budget for the European Union on Friday, but played down expectations of a resolution before the weekend as divisions lingered on where cuts should be applied.

The euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Moody's Investors Service has downgraded France's government bond rating, citing the country's weak economic growth outlook and its exposure to Europe's economic crisis.

The 17-country eurozone has fallen back into recession for the first time in three years as the fallout from the region's financial crisis was felt from Amsterdam to Athens. And with surveys pointing to increasingly depressed conditions across the 17-member group at a time of austerity and high unemployment, the recession is forecast to deepen, and make the debt crisis — which has been calmer of late — even more difficult to handle.

Europe's economy is still reeling and unemployment could remain high for years despite the progress made in solving the debt crisis, the European Union warned Wednesday, as it downgraded next year's forecasts for the 27-country bloc.

French industrialist Louis Gallois called for a patriotic effort to reverse declining competitiveness through shock therapy as he handed in a review on Monday which the Socialist government commissioned and is now under pressure to heed.

A sign taped to a wall in an Athens hospital appealed for civility from patients. "The doctors on duty have been unpaid since May," it read, "Please respect their work." Patients and their relatives glanced up briefly and moved on, hardened to such messages of gloom. In a country where about 1,000 people lose their jobs each day, legions more are still employed but haven't seen a paycheck in months. What used to be an anomaly has become commonplace, and those who have jobs that pay on time consider themselves the exception to the rule.

The jobless rate ticked up to 11.6 percent from the 11.5 percent in August, as 146,000 more people were classified as unemployed, data showed on Wednesday.

In spite of years of harsh spending cuts and tax increases, Europe's debt problems are getting worse. Figures from the EU's statistics office Wednesday showed that, at the end of the second quarter, the total government debt of the 17 countries that use the single currency was worth 90 percent of the group's total economic output for the year - the highest level since the euro was launched in 1999.

Britain will have to keep cutting public spending to reduce the budget deficit, Prime Minister David Cameron said on Sunday, underlining the government's tough task of pulling the country out of recession while winning back waning public support.