European Commission cuts Eurozone economic forecast

<p>Eurozone’s 2014 economic forecast has been slashed from 1.2 per cent to 0.8 per cent.</p>

The European Commission has slashed its economic forecast for the eurozone, saying the area will only grow by 0.8 per cent this year, instead of the 1.2 per cent previously estimated. It has also has cut its growth forecast for 2015 to 1.1 per cent from 1.7 per cent.

EU vice president Jyrki Katainen, said "the economic and employment situation is not improving fast enough". "The EU’s recovery appears weak, in comparison to other advanced economies and with respect to historical examples of post-financial crisis recoveries, even though these too were typically slow and fragile," the commission said.

The revisions were particularly big in Germany and France, the two largest eurozone economies, for which the commission cut its projections by nearly a full percentage point for 2015. The gross domestic product forecast for Germany was cut from two per cent in May to 1.1 per cent, while France went from 1.5 per cent to 0.7 per cent.

"There is no single, simple answer to the challenges facing the European economy," Pierre Moscovici, the commission’s new economic chief, said in a statement.

"We must all assume our responsibilities, in Brussels, in national capitals and in our regions, to generate higher growth and deliver a real boost to employment for our citizens."

This new forecast comes a day after statistics from Eurostat showed the flash inflation figure to be up to 0.4 per cent for October from the 0.3 per cent recorded in September.

Officials noted that due to the drop in inflation alongside stuttering growth, the bank is still under pressure to ensure that it maintains its stimulus measures. It has already reduced its benchmark interest rate to 0.05 per cent and has begun an asset purchase programme.

Find up to date information on the FTSE 100 and spread betting strategies at City Index.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.