The Eurozone, which consists of 20 member states of the European Union, hit a recession in the first three months of the year. Figures from the EU's statistical agency, Eurostat suggest that the GDP fell by 0.1% in the first quarter of 2023 and in the final three months of 2022 after revised estimates.

Two consecutive quarters of negative growth are defined as a technical recession. The UK was able to avoid the recession, while Germany, the largest economy in the European Union, also showed two consecutive quarters of decline.

Ireland, where GDP fell by 4.6% in Q1, dragged down the collective growth across the 20-country single currency area.

This comes after a tough year for European countries due to the ongoing Russia-Ukraine war which caused a sharp increase in gas prices. Now even though oil and gas prices have fallen in recent months, the steep surge left a major impact on household confidence and forced them to reduce their consumption.

Capital Economics in a research note said, "GDP is most likely to contract again in Q2 (the second quarter) as the effects of monetary policy tightening continue to feed through. Domestic demands have been hit hard by the combination of inflation and high-interest rates."

ECB chief Christine Lagarde said inflation remains "too high" as the inflation is well above the 2.0% target set by ECB. He also added a smaller rate of increase could be on its way.