Financial News
- 23 February 2013, 17:24
Eurozone Economy Will Shrink Again, Warns EU
The EU has warned that the eurozone's economy will remain in recession for longer than expected.
In its winter economic forecast, the European Commission (EC) said the economy of the currency bloc - which consists of 17 countries - would shrink by 0.3% this year.
This follows a 0.6% contraction last year, and marks a reversal from the EC's previous prediction of 0.1% growth in 2013.
But it stressed that the eurozone would return to growth in 2014 - when the economy would increase by 1.4%.
Not all economists were convinced by the EC's forecast, however.
"I'm a little sceptical about their forecast of a pronounced recovery next year," Ken Wattret, European economist at BNP Paribas, told Sky News.
"I think the headwinds to growth in the euro area from the banking system, from fiscal policy, from political uncertainty - I think they're rather persistent."
The EC predicted that Germany's economy would grow by 0.5% this year, but France, - Europe's second-largest economy - will post growth of just 0.1%.
Italy's economy is expected to contract by 1%, and Spain's by 1.4%.
The extended recession will see millions more people lose their jobs, the EC said, with the level of unemployment across the region expected to continue to rise.
Unemployment in the eurozone is forecast to hit 12.2% in 2013 - up from 11.4% last year - which could take the number of people without a job to more than 20 million.
The European Commissioner for economic and monetary affairs, Olli Rehn, said "decisive" policy actions were "paving the way for a return to recovery".
what do you think?
David Francis
All this bad news and still they press on with relentless red tape & beauracracy for businesses and workers 'rights' that make European businesses less competitive. Their prediction for 2014 is purely wishful thinking. TIME WE WERE OUT OF THE EU.
David Thehnome
The workers rights provided by the EU are minimal at best. Do you think that people should be forced to work over 42 hours a week, over 8 full time days in a row or have to do two shifts with less than 11 hours in between them? Do you think employers should be free to descriminate on the grounds of gender or race? Which employment rights do you disagree with, because I've heard a lot of people complain about EU employment rights, but very few people willing to come out and say what exactly they think is wrong...
blue side
A failed concept as the diversity is too much - if they de-layered it and got rid of red tape it might (only might) work but for now our it ties us and everyone else down
davenlesley
Blue side. When it starts dragging Germany down that is when the EU goes to the wall
blue side
Lets hope that's soon Dave - or maybe they are not telling us something !!
davenlesley
Lets face it just like economists the world over they are just guessing. They got this years forecast wrong so why believe the 2014 forecast which has already been called into question. And as for "decisive" policy actions is anyone out there old enough to remember the last time the EU acted decisively as opposed to fudge & compromise.
blue side
I remember Dave it was just before the EEC became the EU - do I get a prize now?
blue side
seems we have someone who loves the EU - must be a Lib Dem voter or someone incapable of making a comment
davenlesley
Blue side. Yes well done. You must watch Birmingham City with your eyes open!
blue side
thanks dave is that a prize or punishment?
davenlesley
Blue side. Ok then. If you are very very good we will let you close them
Name witheld
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pjbeckett
Forget unions of all kind particularly the EU.
gordon
The Euro is finished. Just let it die. There is no way back to prosperity. The management by Brussels is pathetic. It was doomed from day one as countries like Portugal, Spain cannot exist on the same interest rates as Germany. Greece is incapable of collecting taxes as is italy to a lesser degree. I seem to think that we will never see a return to prosperity in Europe in the next 20 years. Just not possible.
peter brady
I have to agree with Davenlesley a little when he writes that economists seem to be guessing much of the time. Let's not forget that economists and speculators are responsible for the crisis in the first place with their constant repackaging of debt and unsecured finance and over lending. About a year ago the press in this country was harping about the decline of the Euro and the 'collapse' of the EU. None of it - obviously - came to pass. And neither will it. The Euro will remain a strong currency and the EU will continue to be unified and strong.
peter brady
The EU is one of the world's key economic players, accounting for about 30% of global GDP and 20% of global trade flows. Apart from the EuroZone the Euro is also used, either formally as legal tender or for practical purposes, by other countries such as close neighbours and former colonies. Therefore the euro has rapidly become the second most important international currency after the dollar.
Michael Hawkins
"The European Commissioner for economic and monetary affairs, Olli Rehn, said "decisive" policy actions were "paving the way for a return to recovery". "DECISIVE" it has been going on since 2008 Heaven help us if they are indecisive
t.bulgin
Eurozone Economy Will Shrink Again Of course it will, take a look at the massive leeches, france and Italy. One so contemptably lazy that thinks the world owes it a living The other so deeply beset with corruption that it seems to be terminal. The only way for the EU to ever be successful is to eject these two countries for good. That isn't going to happen therfore its doomed. We must get out now, its the lesser of two evils.
brian foster
10:47am on 22/2/2013
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