MercoPress. South Atlantic News Agency

Euro zone industrial production plunges 12% in December

European industrial production dropped the most on record in December, pointing to a deepening economic slump in the fourth quarter. Output in the Euro region fell 12% from the year- earlier month after an 8.4% decline in November, the European Union's statistics office in Luxembourg said on Thursday

The December drop was the biggest since the data series began in 1986 and compared to the production fell 2.6%, the most in almost 20 years. Companies across Europe are cutting back output as the global financial crisis derails purchases of everything from cars to factory equipment and with the Euro-area economy forecast to contract 1.9% this year, the European Central Bank has indicated it may cut interest rates further. In Germany, Europe's largest economy, plant and machine makers plan to reduce output and cut as many as 25,000 jobs this year as sales falter, the VDMA machine makers association said this week. Production may fall 7% in 2009 after rising 5.4% last year, the Frankfurt-based association said. Overall German output fell 12.4% in December from a year earlier and was down 4.9% from November, according to the report. December production also declined in France, Spain and Italy. A separate report today showed that the Spanish economy contracted by the most in more than 15 years in the fourth quarter, entering what may be the worst recession in 50 years. "The latest data and survey indicators point to a substantial decline in real GDP in the fourth quarter" ECB Vice-President Lucas Papademos said in London. "Stormier weather may still lie ahead," he added, warning of "continued weakness" in the first half of 2009