The latest data from Eurostat recorded that economic growth in the Euro-zone decreased by -0.2% during Q2 2008 compared to an increase of +0.7% in Q1. It has lead to fears that this could impact on the already struggling UK economy and draw the country into recession.

However, Eurostat found that the annual growth rate still remained positive although somewhat reduced at +1.5% compared to Q1’s figure of +2.1%.

Member state data was also provided by Eurostat. The UK economy continued to increase on a quarterly basis, albeit marginally at +0.2%. The Euro-zone’s largest economy, Germany, suffered one of the biggest contractions at -0.5% and other key members, France and Italy, both saw growth drop by -0.3%.

Analysts have raised concerns that as the UK’s trading partners in the Euro-zone head towards recession, the country’s exports could be the first to suffer.

Patrick Foley, chief economist for the Lloyds TSB Group, told PIN: “The contraction of the Euro-zone economy will undoubtedly impact on growth in the UK. Due to the current weakness of the sterling it will only be export trade which will keep the economy going. At the moment the Euro-zone accounts for 50% of the UK’s exports. In the absence of these exports I would see the country moving into recession.”

Foley warned that a 1% slowdown in UK exports would lead to -0.1% reduction in economic growth.