The European Commission has delivered its latest report on the health of the region, and there's little to feel cheerful about.
The EC had said that the eurozone would pull itself out of financial mire by the end of 2013. But delivering its winter forecast, the Commission has now warned the 17-nation bloc will not return to growth until 2014.
The EC forecasts the eurozone’s economy will shrink by 0.3% this year, downgrading its previous prediction last November that the region would record 0.1% growth in 2013.
A squeeze on bank lending and record-high unemployment levels have been blamed for the delayed recovery. The EC said that financial market conditions in the EU have improved substantially since last summer, but that economic activity was disappointing in the second half of 2012. It means the eurozone will stay in its second recession since 2009 for a year longer than originally foreseen.
Taking into account the EU as a whole though, the area’s GDP is expected to grow by a marginal 0.1%. But the weak economic activity is expected to lead to an increase in unemployment this year to 11.1% in the EU and 12.2% in the euro area.
Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro, said ‘he ongoing rebalancing of the European economy is ‘continuing to weigh on growth’ in the short term.
‘The current situation can be summarised like this: we have disappointing hard data from the end of last year, some more encouraging soft data in the recent past, and growing investor confidence in the future,’ Rehn said.
Once again, the gulf between the French and German economies is widening. France's services sector shrank at its fastest rate in February for nearly four years. Not good news for Paris during a week when Maurice Taylor, the blunt-speaking chairman of U.S. tyre giant Titan International American, accused French workers of being 'lazy and overpaid" not to mention talking too much.