European Union back in recession in third quarter

European Commission flags fly at the EU headquarters in Brussels on May 9, 2011. The European Union has won the Nobel Peace Prize, announced on Friday, Oct. 12, 2012. (AP Photo/Yves Logghe, File)

European Commission flags fly at the EU headquarters in Brussels on May 9, 2011. The European Union has won the Nobel Peace Prize, announced on Friday, Oct. 12, 2012. (AP Photo/Yves Logghe, File)

BRUSSELS — The 17 countries that use the euro fell back into recession for the first time in three years as the impact of the region's sprawling debt crisis began to be felt in the region's stronger economies.

Eurostat, the EU's statistics office, said Thursday the eurozone economy contracted by 0.1 percent in the July to September period from the quarter before.

The slump was in line with market expectations and follows on from the 0.2 percent decline recorded in the second quarter. As a result, the eurozone is officially in recession, commonly defined as two straight quarters of falling output.

The eurozone has dodged recession during its three-year debt crisis, mainly thanks to the strength of its largest single economy, Germany. But even that country is struggling now as demand falls off from the other members of the eurozone, mainly the southern economies of Greece, Spain, Italy and Portugal. Germany's economy grew a muted 0.2 percent in the third quarter, down from a 0.3 percent increase in the previous quarter.

Five eurozone countries are in recession — Greece, Spain, Italy, Portugal and Cyprus. Those five are at the front line of Europe's debt crisis and are enacting austerity measures, such as cuts to pensions and tax rises, in an attempt to stay afloat.

The wider EU, which includes non-euro countries, avoided the same fate. It saw output rise 0.1 percent during the quarter, largely on the back of an Olympics-related boost in Britain.

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