PARIS — Signs of a deepening downturn in Europe multiplied Wednesday as Britain reported that its second recession in three years was growing worse and the outlook for the German economy deteriorated.


The reports follow the decision by Moody’s Investors Service late Monday to downgrade the economic outlook for Germany and two other strong northern European economies, Luxembourg and the Netherlands.


Late Tuesday, Moody’s also downgraded the outlook for a rescue fund, the European Financial Stability Facility, that European leaders put together to keep the long-running debt crisis from spreading. The downgrade could make that goal much more costly to achieve by making it more expensive for the fund to raise money.


Efforts to contain the crisis took on renewed urgency Wednesday as investors continued to drive Spain’s borrowing costs to record highs as they shunned buying the country’s debt. Fears are growing that Madrid may have to seek an international bailout for its teetering economy, on top of a bailout of €100 billion, or $121 billion, that was recently approved to shore up its banks.


The concerns put further pressure on Italy, which Prime Minister Mario Monti recently warned was getting caught up in the financial contagion.


Moody’s recently downgraded the sovereign debt of Italy, largely on concern that the country, whose economy is already struggling, would face added costs to help clean up the euro zone debt crisis if it intensified in Spain.


Mr. Monti has implemented a series of austerity measures to reduce a mountain of debt that had already made investors wary about Italy’s finances. On Tuesday he imposed a strict regime of spending cuts on the government of Sicily, whose high debts, large number of public employees and lack of fiscal transparency have raised fears that the region is on the brink of default.


The Sicilian regional president, Raffaele Lombardo, said Tuesday that he would honor his pledge to step down at the end of July. The move is expected to give Mr. Monti a bit more muscle in reining in spending in Sicily, an autonomous region in which Rome has only limited power to intervene.


In a sign that businesses and consumers are reluctant to invest in the euro zone’s future, a report from the European Central Bank showed that demand for loans in Europe remained weak in the second quarter, even though the E.C.B. has cut interest rates to record lows and injected huge amounts of credit into the banking system.


The interest rate investors charge Spain to borrow money for 10 years stood at 7.31 percent late Wednesday, having surged to 7.65 percent, a record high.


Spain is trying to avoid having to get a full-blown international bailout, as Greece, Ireland and Portugal have done. But as the costs of managing its debt escalate each day, many investors increasingly believe that Spain will have no choice but to seek outside help.


The country is already struggling to cope with a new raft of austerity measures to mend its finances, even as unemployment nears 25 percent and several of its largest regions seek their own bailouts from Madrid because their finances have been depleted.


The troubles have ricocheted back to Britain, which has labored under its own austerity plan for the better part of two years. On Wednesday, the government said the gross domestic product fell 0.7 percent in the second quarter after declining 0.3 percent in the first three months of the year.


BNP Paribas described the decline as “shocking” and said the downturn was much larger than what many people had anticipated. The British economy suffered sharp declines in the industrial, construction and services sectors. The sovereign debt crisis has contributed to Britain’s problems, since the European Union is the country’s biggest trade partner.


In Germany, business confidence fell across all sectors in June, according to the Ifo business survey released Wednesday, a key indicator of the country’s industrial health. Businesses said they saw a marked deterioration in the outlook for manufacturing and trade, two of the biggest drivers of the German economy.


The outlook for the services sector also fell sharply, leading some economists to predict that the German economy would suffer a further slowdown this autumn.


Other reports out of Germany “increasingly point to a weak economic outlook for Germany in the second half of 2012,” Barclays analysts wrote in a report. “Clearly, the intensification of the euro area crisis continues to weigh on business confidence.”


The E.C.B.’s quarterly lending survey of senior loan officers at 130 banks found that banks continued to report “a significant fall in demand for loans to enterprises.” Banks also reported a “strong decline” in demand for loans to consumers for durable goods — big-ticket items that last for several years, like cars and home appliances.