Crisis deepens as slowdown spreads to the core

The latest rescue package for Greece has reduced the threat of a near-term catastrophe in the eurozone.But it does not address the fundamental problems facing Greece itself and is unlikely to bring an end to the recent signs of contagion to bigger economies like Italy and Spain. Meanwhile, the economic data has brought growing evidence that the weakness of activity in the peripheral economies is starting to spread to the core, with even Germany – the powerhouse of the recovery – losing steam. With growth likely to slow further over the coming quarters and the fiscal crisis set to continue, doubts over the future of the currency union are likely to grow.