EU: Economy Worse Than We Thought
Commission revises forecast downward
By Matt Cantor, Newser User
Posted May 3, 2013 8:41 AM CDT
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)

(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.