THE EU has slid further into recession, with quarterly growth in its 27 member states slowing by 1.5 per cent in the last quarter of 2008 compared with the previous quarter. The figures, released yesterday by the EU’s statistical office, confirm February estimates.

GDP in the 15 countries using the euro last year also fell by 1.5 per cent in the final quarter, after a 0.2 per cent drop in the third quarter.

Compared to the same period the previous year, GDP for the final quarter of 2008 fell by 1.3 per cent in both the euro area and the 27 member states as a whole.

The figures are the result of a contraction of trade, coupled with a decline in private consumption and investment.

During the fourth quarter of 2008, consumer spending fell by 0.9 per cent in the euro area and 0.8 per cent in the wider EU.

Trade was the hardest hit, with exports down 7.3 per cent in the euro area and 6.8 per cent in the EU, quarter-on-quarter, while imports saw a drop of 5.5 per cent across the euro zone and the EU.

Investments were also down 2.7 per cent in the euro area and 2.5 per cent in the EU.

Tánaiste and Minister for Enterprise Mary Coughlan, who was in Brussels yesterday for a meeting with her European counterparts, said: “There’s been a huge contraction of the economy and every colleague I’ve met has the same issue.”

The European Commission’s January forecast predicted a 2 per cent contraction in GDP in 2009, followed by low positive growth of around half a per cent in 2010. However, commission and European Central Bank officials have said that these forecasts are likely to be optimistic and will have to be revised downward.

Sweden showed the largest seasonally-adjusted slowdown in the EU, with quarter-on-quarter GDP falling by 2.4 per cent in the last quarter of 2008. Germany was next with -2.1 per cent and Denmark and Portugal followed with -2 per cent each. Estonia showed a 4.2 per cent quarterly drop, although its figures do not take into account seasonal fluctuations.

The news comes as the European Central Bank slashed its borrowing rate to a record 1.5 per cent after inflation in the 16 countries now using the euro (since Slovakia joined on January 1st) continues to remain low at 1.2 per cent, according to Eurostat figures.

US and Japanese growth also fell in the final quarter last year, by 1.6 per cent and 3.3 per cent respectively.