Here are some graphics that helps understanding why European economy is sinking and sooner or later, the northern countries will have to admit austerity measures will not be effective unless there will be a solid growth of the real economy in all the euro zone, including the peripheral southern countries. Not understanding this will bring the crises to the core of the euro zone (Germany, France, The Netherlands).
INFLATION RATE
Inflation rate is pointing down, the ECB succeded in keeping inflation below 2%, hopefully will not get to the point where inflation becomes deflation or stagflation. I think deflation is the most probable scenario, facing the fact that the economy isn't really showing signals of increasing and a rate hike is not very probable at least till mid 2014.
GDP
UNEMPLOYMENT RATE ( AS A % OF THE LABOR FORCE)
In the next two graphs is pretty clear how the sub-prime 2008 crises that took place in the US was spreading over the European banking system and, from there, to the single European nations.
GOVERNMENT DEFICIT/SURPLUS (% OF GDP)
GOVERNMENT DEBT ( % OF GDP)
Meanwhile, citizens of Europe and the UK are paying with increasing austerity measures and taxes keep on being raised.
Source. European Central Bank
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