The European Commission slashed its economic outlook for the eurozone yesterday, putting even more pressure on the European Central Bank to expand its arsenal of extraordinary measures aimed at arresting slowing growth and fending off deflation.
The Brussels forecast, which predicts the currency bloc growing only 1.1 per cent next year, down from a forecast of 1.7 per cent just six months ago, is one of the most serious indicators yet that the long hoped-for recovery from the continent’s debt crisis may be stalling.
The commission acknowledged the EU economy was not only “particularly weak” as compared to other developed countries, but was also underperforming historic examples of post-crisis recoveries, and the slowdown risked feeding on itself. “The legacy of the crisis is affecting member states to different degrees but spillovers through trade and confidence are large,” it found.
