The European Commission has added its voice to the growing drumbeat of bad news about the European economic recovery with growth downgrades
German growth slows to 1.3% from 1.8%, while France slides from 1% to just 0.3% growth, especially big revisions considering the last forecast was six months ago.
This year’s Eurozone growth is now likely to be only 0.8%, down from an already feeble 1.2% estimate.
To make matters worse, those downgrades extend to the 2015 forecast, too. The Commission also forecast continued low inflation and high unemployment.
The EU’s new Economic Affairs Commissioner says a 300 billion euro investment plan to be ready by Christmas will be key to growth.
“Now that the Eurozone and Europe in general have restored stability our big challenge is to add some energy to the economy, to build a central spine of growth and job creation, and the main way of doing that we feel is through investment,” said Pierre Moscovici.
Britain escaped the Commission’s downgrades. It actually issued a rosier growth outlook for 2015 at 2.7%, up from 2.5%, food for thought when so many in the UK seem upset at increased EU budget contributions.
Although none of the eurozone economies is expected to face any major threat, the downgrading of the growth projections raises fears about a new circle of recession and a possible deflation crisis.