EU expects recession until 2011

May 4th, 2009 - 4:42 pm ICT by IANS  

Brussels, May 4 (DPA) The European Union is facing a recession until at least 2011, with the bloc’s economy set to contract by 0.1 percent in 2010 following a worse-than-expected slump of 4 percent in 2009, the EU’s executive said Monday.
The 16 countries which use the single currency, the euro, are also expected to see growth contract by 4 percent in 2009 and 0.1 percent in 2010, the European Commission said.

In January, the commission predicted that the EU’s economy would contract by 1.8 percent this year before returning to a modest growth rate of 0.5 percent in 2010.

But that prediction was scrapped as the bloc’s five biggest members turned in grim economic data for the next two years.

Germany, the EU’s economic motor, now faces a contraction of 5.4 percent this year. Italy’s economy is set to shrink by 4.4 percent, while Britain faces a fall of 3.8 percent, the commission said.

While the trio are set to grow marginally in 2010, France and Spain face recessions stretching to 2011, with the French economy contracting by 3 percent in 2009 and 0.2 percent in 2010, and Spain facing falls of 3.2 percent in 2009 and 1 percent in 2010.

The EU-wide economic slump is set to trigger a surge in unemployment and government spending as companies and governments struggle to make up for evaporating revenues.

Some 8.5 million Europeans are set to lose their jobs over the next two years, with unemployment hitting 10.9 percent in the EU and 11.5 percent in the euro area in 2010, the commission said.

Spain, whose economy has been hard hit by the collapse of a housing bubble, faces an unemployment rate of 20.5 percent by 2010.

And governments across the EU are set to smash through the bloc’s self-imposed rule limiting deficit spending to 3 percent of GDP, with all four of the eurozone’s biggest members - Germany, France, Italy and Spain - set to breach the barrier in the next two years.

Britain’s deficit is set to soar to 13.8 percent in 2010.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |