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Associated Press photos
Audi and VW cars stand ready for export at a German port. German exports slipped 1.5 percent in June amid the European financial crisis.

Europe strains to post growth

Signs of weakness pervasive

Shipping containers pile up at a port in Duisburg, Germany. Imports dropped 3 percent as industrial production fell 0.9 percent.

– Europe’s biggest economies are showing increasing signs of weakness, a sign that the struggles of their heavily indebted neighbors are spreading.

The central banks of France and Britain, Europe’s second- and third-largest economies, made grim forecasts Wednesday, while data out of Germany, its largest economy, showed a weakening in manufacturing.

Europe – which includes the 17 troubled countries that use the euro – has been struggling for three years as economies across the region face deepening recessions.

Spain and Italy, the two current chief trouble spots, are threatened with a financial collapse and could soon join Greece, Portugal, Ireland and Cyprus in seeking financial assistance so that they can pay their way. This will stretch the eurozone’s already-fragile economy to breaking point.

A continued recession in Europe would be felt around the world. The region is U.S.’s largest export customer. Any fall-off in demand in Europe will hit order books, and jobs, back in the U.S.

Last week, Germany’s Volkswagen saw its sales in Europe drop by 1.5 percent in the second quarter in an overall market that has shrunk 8.6 percent. The German carmaker’s business in North America and Asia allowed the company to record a 19 percent sales increase for the quarter.

Markets across Europe on Wednesday gave up the gains they had made earlier in the week.

One of Europe’s leading economies, the United Kingdom looks set to stagnate this year, according to the Bank of England.

In its quarterly Inflation Report released Wednesday, the U.K.’s monetary authority, scaled back its forecast for 2012, saying the economy will not grow overall in 2012.

The country, though not a member of the 17-country euro bloc, has been feeling the effects of the downturn in the rest of Europe and has been in recession since the last quarter of 2011.

Industrial production and exports in Germany, dropped in June – highlighting concerns that Europe’s debt crisis is increasingly weighing on the region’s biggest economy.

Industrial production was down 0.9 percent compared with the previous month, the Economy Ministry said.

The German economy has been relatively unscathed from the debt crisis afflicting its eurozone partners. But second-quarter output figures due next week are expected to show growth slowing from the healthy first-quarter, and business confidence is fading.

France’s central bank added a further note of pessimism Wednesday when it predicted the country would slip into recession in the third quarter.

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