The European Union scaled back its growth forecast Tuesday, suggesting that economic recovery will take longer than had previously been anticipated. Expectations for growth in the 18-country eurozone were already low earlier this year at 1.2 percent, but the European Commission scaled that back to 0.8 percent as larger countries such as Germany and France have struggled in recent months.
"The situation in the euro area remains extremely fragile," German Chancellor Angela Merkel said, according to the Associated Press. The outlook for the next two years is not much better. The European Commission’s 2015 growth prediction for the 28-country Economic and Monetary Union was slashed from 1.7 percent to 1.1 percent, while unemployment is only expected to fall from 11.6 percent this year to 11.3 percent in 2015 and 10.8 percent in 2016, the AP reported.
But there are some bright spots in non-eurozone countries that serve as a counter to the disappointing growth expectations in some of Europe’s largest economies. The European Commission’s growth forecasts for nations including the Czech Republic, Hungary and the U.K. were all adjusted upward Tuesday, according to the Wall Street Journal.
The growth forecast for the U.K. was raised from 2.7 percent for this year and 2.5 percent for 2015, to 3.1 percent for this year and 2.7 percent in 2015, though growth is still expected to slow to 2.5 percent for 2016, Bloomberg reported. “The strong growth enjoyed in the first half of 2014 is expected to continue, driven by private consumption and investment,” the European Commission said of its updated forecasts for the U.K. “Net exports are projected to detract from growth.”
But that positive news only highlights the poor showing in the eurozone, where the commission’s forecasts for investment spending -- a key indicator of economic recovery -- were cut from 1.7 percent this year and 4.2 percent in 2015, to 0.6 percent this year and 1.7 percent next year, the Journal reported.
The commission knocked the German growth forecast for this year from 1.8 percent to 1.3 percent. The growth forecast for Germany for 2015 was lowered from 2.0 percent to 1.1 percent.