Europe's economic recovery will fail to gain any real momentum this year, according to the European Commission, as the unprecedented stimulus begins to wear off.
Published: 11:34AM GMT 25 Feb 2010
In its semi-annual set of forecasts for the eurozone, the Commission predicted that the region's gross domestic product will see growth of 0.2pc in the first, second and third quarters of the year before the pace increases to 0.3pc in the final three months.
“With many of the driving forces being still temporary in the EU and globally, the robustness of the recovery is yet to be tested,” the Commission said. Global indicators are “encouraging in the short term,” but uncertainty “remains abundant,” it added.
The forecasts come against an increasingly fraught backdrop for European Monetary Union, which is facing the severest test in its history. The euro has fallen 6pc so far against the dollar this year as fears about Greece's ability to repay its debts cast a shadow over the whole eurozone.
"The recovery is going to be characterised by extraordinarily weak consumer demand," James Nixon, co-chief European economist at Societe Generale, told Bloomberg. "We're still looking at positive growth figures, but they won't be very big."
Germany's recovery unexpectedly stalled in the final three months of 2009 and the Commission is predicting another flat three months this quarter. According to the forecasts, Europe's largest economy will then expand 0.3pc in the next two quarters.