European Union slashed its economic growth forecasts for the bloc on Tuesday, indicating the recovery will remain sluggish amid problems for the biggest economies, particularly France.
The official forecast for growth this year in the 18-country eurozone was cut to 0.8 per cent from a prediction of 1.2 per cent made in the spring.
The broader 28-nation E.U., which includes non-euro members like Britain and Sweden, was expected to grow 1.3 per cent this year, down from a 1.6 per cent forecast previously.
“The economic and employment situation is not improving fast enough” in the wake of the financial crisis that has hit the continent for the past half-decade, said E.U. Vice-President Jyrki Katainen.
The European Commission blamed in particular a weaker performance in Europe’s larger economies, with the exceptions of Spain and Britain.
The European Commission sees growth this year “coming to a stop in Germany after a very strong first quarter, protracted stagnation in France, and contraction in Italy”.
France has been under pressure for years to improve its economic performance but the E.U. forecast said that “growth is forecast to remain low in 2014 and 2015” while its deficit and overall debt “are expected to continue rising”.
Germany, Europe’s largest economy and for years the region’s engine of growth, was expected to stagnate for the rest of the year, with growth “set to resume gradually”.
The outlook for 2015 is not much better, with forecasts being slashed there, too.
France was already in trouble with the E.U., and was only given a provisional green light for its bulging budget deficit last week. It should not expect too much help from its overall economic performance. “Short-term indicators do not suggest that a firm recovery is imminent”, the forecast said.
