THE EUROZONE’S economy will barely grow at all next year, the European Commission warned yesterday, slashing its previously upbeat growth projections.
Official forecasts now put 2013’s growth at just 0.1 per cent, well short of the one per cent predicted in May.
That gloomy outlook means government debts will keep rising more quickly than expected – debt is now expected to keep growing fast, to hit 94.5 per cent of GDP next year rather than the 92.6 per cent previously predicted.
And the currency area’s army of unemployed will keep growing to 11.8 per cent, rather than hold steady at 11 per cent as forecasts six months ago expected.
For the EU as a whole, the growth outlook has been cut from 1.3 per cent to 0.4 per cent, while government debt is set to come in at 88.5 per cent of GDP, not 87.2 per cent, and unemployment is forecast to rise to 10.9 per cent, not 10.3 per cent.
“The ongoing post-financial crisis correction continues to weigh heavily on economic activity and employment in the EU, yet compared with the situation before the summer, financial tensions have somewhat abated,” the forecast said.
“The full implementation of far-reaching policy measures announced over recent months and progress with the correction of imbalances should reduce financial stress in vulnerable member states further and lead to a gradual restoration of confidence across the EU, which is necessary for investment and private consumption to return.”
Germany and France both saw their GDP forecasts cut by 0.9 percentage points to 0.8 per cent and 0.3 per cent respectively, while Spain and Italy’s were both cut 1.1 percentage points to falls of 1.4 per cent and 0.5 per cent.
Greece saw the biggest downgrade, from an earlier forecast of flat GDP in 2013 to a fall of 4.2 per cent.
The UK also saw its forecast chopped back, with growth now predicted to come in at 0.9 per cent in 2013, not the 1.7 per cent previously expected.