According to the latest EU interim forecast economic growth in the region is slowing and is expected to ‘remain subdued’ for the rest of the year.
After that it says that growth will be ‘close to standstill at year-end’.
It does though put growth for the year in the Eurozone at 1.6% and 1.7% in the EU due to the strong start we had to 2011.
Olli Rehn, the EU Economic and Monetary Affairs Commissioner, said "The outlook for the European economy has deteriorated. 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. The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy. To get the recovery back on track, it is crucial to safeguard financial stability and put budgets on a path that is sustainable beyond doubt. This requires steadfast continuation of the strategy of differentiated, growth-friendly fiscal consolidation and the implementation of the decisions to support financial stability. At the same time, structural reforms remain more important than ever to build tomorrow's growth potential."
For the UK the Commission forecasts that growth will drop from the previously forecast 1.7% down to just 1.1% and that the higher than expected energy price rises will filter through to push inflation up from the previously thought 4.1% to 4.4%. this compares badly with the EU predictions of 1.7% for growth and 2.9% for inflation.
The one good piece of news is that the Commission sees inflationary pressures easing in 2012.
Overall the risk profile on growth is still pointing to the downside, says the report, despite inflation looking to ease somewhat next year.