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Western world at risk of double-dip recession

Crumbling economic confidence in the US and Europe may lead to another financial plunge.

With confidence collapsing in the US and Europe, the West is at risk of a double-dip recession.

Germany is experiencing the most drastic one-month fall since records began in the 1970s.

The US Conference Board's index of consumer sentiment hit its lowest level in August, since the depths of the economic slump in 2009.

The drop from 59.2 in July to 44.5 this month was far greater than expected, and new International Monetary Fund chief Christine Lagarde said that the global economic crisis has begun a "dangerous new phase", the Telegraph reports.

According to a leaked draft of the IMF's World Economic Outlook, the fund has advised the US Federal Reserve and the European Central Bank to prepare for "further easing of monetary policy". This has been interpreted as a new wave of quantitative easing by the Federal Reserve.

The European Commission's economic sentiment index also dropped below the contraction line in August.

Read the full article here.

Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.