EU forecasts eurozone to shrink this year

EU forecasts eurozone to shrink this year The economic slowdown that has shaken the eurozone’s periphery will continue to bleed into the currency bloc’s core this year, with both France and Germany barely growing, according to highly-anticipated forecasts published today by the European Commission. The worsening economic picture – where France’s gross domestic product is expected to grow by just 0.1 percent and Germany’s by 0.5 per cent in 2013, both 30 basis point downgrades from just three months ago – will see the eurozone as a whole shrink 0.3 per cent this year. The Commission had predicted growth of 0.1 per cent in November. The bleak picture threatens to upend eurozone efforts to bring down debt levels across the region. Eurozone government debt is expected to hit 95.1 per cent of GDP this year, the highest levels since the creation of the single currency. It will also make it difficult for several eurozone governments to hit EU-mandated deficit targets. France, which has become the subject of particular concern, is expected to post a deficit this year of 3.7 per cent of GDP, a significant miss of its 3 per cent target and a forecast that could lead Brussels to force the anti-austerity government of President François Hollande to impose new cuts in order to hit the target.


http://link.ft.com/r/VKY5JJ/OFTSO7/QFRUDM/HYZZ7O/JQBP63/RF/h?a1=2013&a2=2&a3=22