EU: Economy Worse Than We Thought

Commission revises forecast downward

By Matt Cantor,  Newser Staff

Posted May 3, 2013 8:41 AM CDT

(Newser) – The European Union's economic near-future is looking bleaker than expected: Its economy is poised to shrink 0.1% this year, the European Commission forecasts, instead of growing 0.1% as February predictions held. Things look even tougher for the eurozone, for which the commission foresees an 0.4% contraction rather than the earlier-forecast contraction of 0.3%, the Wall Street Journal reports. Officials blame continuing high unemployment and disappearing credit for homes and businesses.

The EU unemployment rate is likely to stay at 11.1% through 2014, they predict; the eurozone will see 12.2% unemployment this year and 12.1% next. And that's not just an economic issue, the report notes: "Intolerably high unemployment in vulnerable member states gives cause for a great concern as it endangers social cohesion." The situation differs wildly between countries, the Journal notes, with Austrian unemployment expected at 4.7% this year compared to Greece and Spain's 27%. Germany is the only eurozone country to see growth forecast this year, Reuters points out.

Italian Prime Minister Enrico Letta, left, speaks as European Commission President Jose Manuel Barroso listens during a press conference at EU headquarters in Brussels on Thursday, May 2, 2013.
Italian Prime Minister Enrico Letta, left, speaks as European Commission President Jose Manuel Barroso listens during a press conference at EU headquarters in Brussels on Thursday, May 2, 2013.   (AP Photo/Virginia Mayo)
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