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Eurozone crisis

Eurozone recession to last longer, European Commission predicts

The 17-member eurozone remains mired in a recession and it appears set to stay there for the time being. In its winter forecast, the EU executive has predicted the euro area economy will not achieve growth in 2013.

An economic prognosis released by the European Commission on Friday indicates that the crisis-stricken eurozone is likely facing an extended recession. It revised earlier expectations of minimal growth in the currency bloc this year, predicting that the area's economy was likely to contract by 0.3 percent in 2013.

"The ongoing rebalancing of the European economy is continuing to weigh on growth in the short term, Olli Rehn, the European commissioner for economic and monetary affairs said.

Eurozone set to stay in recession

The report also indicated that the overall public deficit level would be worse than previously expected, with the Commission now predicting it will reach 2.8 percent in 2013.

Germany the odd man out

EU member states are all mandated to bring their deficits below three percent of gross domestic product (GDP), but some eurozone member countries are still far from reaching that goal.

Spain has already been granted reprieves to hit the three-percent target in the face of its struggle with record-high unemployment and the aftermath of its banking crisis.

The Commission expected France's shortfall to reach 3.7 percent this year and 3.9 percent in 2014. Rehn indicated Paris might be given more time too to get on top of its budget deficit, but added a decision would only be made after the executive's spring prognosis.

The current figures and predictions leave a widening gap between France and the eurozone's biggest economy, Germany, which is expected to log 0.5-percent growth this year, to be followed by two-percent growth in 2014.

hg/pfd (Reuters, AP, dpa)

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