After months of living on sustenance provided by the government in the form of financial help auto giant Chrysler finally filed for bankruptcy. Its sudden move adds to speculation that it may tie up with the FIAT brand to manufacture cleaner cars for the future.

Chrysler which is the nation’s third largest automobile manufacturer was forced to file for bankruptcy as a group of credit holders defied the court and government pressure to wipe out the debt piled up. The filing of bankruptcy by auto giant Chrysler is another nail in the coffin of auto mobile industry in America which has borne the brunt of the recession coupled with the rising fuel prices and customer tastes. Most of the manufacturing plants were shut down and workers asked to return home as Chrysler tried to make a last stand before going down. It has been said that the government has sunk about $25 billion in aid to Chrysler and General Motors during these few months.

From zero in the month of May, it dropped down to a miserly -0.1 percent in June. A prediction was made indicating a slump of around minus 0.2 percent by The European analyst office.

With the current scenario the economy is expected to fall into the negative territory for a few more months before it regains stability.
With large scale unemployment and rising prices of commodities coupled with the after effects of the global recession analysts predict that the slump will decelerate the growth of the economy considerably.

ECB has warned of a possible deflation threat in the Euro zone as the year 2009 unfolds. It has showcased reports citing inflation below 2 per cent mark.

The European Union has reported numerous bankruptcies and is undertaking loans and bailouts that will help improve the economy and avert major disaster in terms of the public, jobs and services rendered to them.