The S&P report said that the crisis-hit single currency area will suffer a 0.8 per cent economic contraction this year, followed by stagnation in 2013.
Only in 2014 will the debt-burdened Eurozone begin to recover its lost ground, S&P said. Previously, the group had expected the euro countries’ economies to expand by 0.3 per cent in 2013, but it has now cut its forecasts.
And the outlook for Spain in particular is notably dim, the economists said. The struggling sovereign could be hit by a devastating 1.4 per cent economic contraction next year, compared to S&P’s previous prediction of a more manageable 0.6 per cent decline.
Eurozone woes were exacerbated by a separate report from the FTSE Group, which said Greece was now on its watch list for a potential demotion to being classified as an emerging market.
Despite its economic decline, Greece is still categorised as a developed market.
Meanwhile outside the single currency area, the UK can expect only “very weak growth” in 2013, S&P added. Euro member France will face similarly sluggish growth next year, it said.