The European Commission, the executive arm of the EU, revised its forecast for the economy of the entire region, saying that it now expected the region’s gross domestic product to contract by 0.3% on an annual basis this year, rather than remaining flat as it predicted in the spring. It also said that the 17 countries that use the euro will contract, with GDP falling 0.4%, against a previous expectation of a 0.3% fall.
But the most significant downgrade is for next year’s forecast. The commission had expected the eurozone to find its footing in 2013, with 1% growth. Now it predicts only a 0.1% uptick. For all 27 countries in the EU, it forecasts 0.4% growth, compared with 1.3% last spring.
Unemployment rate has hit a record high at 11.6% with 18.5m people out of jobs in the EU according to Eurostat.
Most European governments have in recent years had to cut spending, pensions and benefits and raise taxes aggressively to bring public debt under control. That includes not only the most financially troubled governments, like Greece, but also the traditionally more stable ones, like France and Britain.
Police and anti-austerity protesters clashed in central Madrid on Wednesday as Spain held a general strike as part of a Europe-wide day of action.
Police tussled with hundreds of young protesters, trying to disperse them and prevent them from blocking the main Gran Via avenue in the Spanish capital.
Workers went on strike across southern Europe to battle austerity cuts, some blocking streets or burning tyres at picket lines as they paralysed swathes of industry and transport.
Spain and Portugal held the first coordinated general strike in the Iberian Peninsula, slashing train, bus and metro services, halting factories and cancelling more than 700 flights.
They were backed by temporary walkouts in Italy, the number-three eurozone economy, and Greece, which is fighting to avert default despite agreeing 13.5 billion euros ($17 billion) in cuts and tax increases.
Demonstrators from Spain’s main trade unions, some waving red flags, set up picket lines overnight at factories, train stations and markets as they launched the second general strike in eight months.
In Madrid, police tried to disperse students blocking roads in the city centre. In the main squares, unions strung up red-and-white banners declaring: “They are taking away our future!”
Earlier, in Barcelona, strikers burnt tyres outside the Mercabarna wholesale market.
Frustration at the right-leaning government’s spending cuts and tax increases is boiling over in Spain, where one in four workers is unemployed and the economy is in deep recession.
By late morning, Spanish police had arrested 62 people and 34 people had been injured, 18 of them police, in “isolated incidents,” said an interior ministry spokeswoman.
Electricity usage was down 15.8 percent from normal, a sign of the impact on industry, she said. That compared to a drop of 21.2 percent at the same time in the last Spanish general strike in March.
Unions, however, said participation was massive, surpassing 85 percent in some industrial sectors.
Portugal’s TAP said it was grounding more than 170 flights, most of them international.
Greece’s unions are focused on the national crisis, rather than the European-wide action, and their protest is limited to a three-hour work stoppage and a rally in Athens.
Despite passing a hotly contested 13.5-billion-euro package of austerity measures last week, Athens is battling to convince its international rescuers to unlock the next bailout payment to stave off collapse.
Italian unions, too, have called a four-hour walkout.
Union-led rallies to support the day of action are planned in France, Belgium and in Poland, where workers decry a “social and wage-dumping” in their country.
In Germany, viewed by many in southern Europe as the paymaster behind the austerity drive, the union federation DGB has called protests across the country including in Berlin and Frankfurt.
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