Gloomy new predictions from Brussels. Euro zone growth this year is expected to be much lower than previously thought.
Joaquin Almunia, the EU’s Economic and Monetary Affairs Commissioner said he hopes for an eventual upturn next year: “The way the European economies will start 2009 – according to this forecast – will not be very good. This profile in 2008, I hope, will be compensated by a positive profile in 2009.”
In its updated forecasts, the European Commission has slashed its prediction for economic growth for the 15 countries using the euro to 1.3% from the 1.7% it predicted in April. That follows weakening growth in the last four quarters.
The Commission’s economists believe that Spain, whose housing bubble has burst, will go into recession in the second half of the year, as will Britain, while the region’s biggest economy, Germany, is already in recession, with GDP having shrunk for two consecutive quarters.