Brussels: Growth in Eurozone Coming to Standstill in H2 2011

Olli Rehn, the Monetary Affairs European Commissioner, informs about the EU Autumn interim forecast 2011-12 during a news conference at the EU council headquarters in Brussels, Belgium, on 15 September 2011. Photo by EPA/BGNES

The European Commission has predicted that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011 due to financial market woes and weakened demand from outside Europe.

"Recoveries from financial crises are often slow and bumpy. Moreover, the EU economy is affected by a more difficult external environment, while domestic demand remains subdued," EU Economic Affairs Commissioner Olli Rehn said at a news conference to unveil the report.

"The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy."

It halved its forecast for July to September to growth of just 0.2%, while the forecast for the last three months of the year is down from 0.4% to 0.1%.

But it remained confident that there would not be a return to recession.

The report predicted that member states having to cut back on their spending to reduce their debt would also hit growth.

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