EU commission warns eurozone of deep economic slump

The European Commission agrees this year the nations using Europe’s single currency will go into recession for the first time since the euro’s creation a decade ago. It believes the recession will be sharp and deep, but not long-lived.

“The risks that we identified in the November forecast have largely materialised and this has very negative consequences; first increases in budget deficits and, first and foremost, an increase in unemployment. According to our scenario with this forecast we should be able to achieve a gradual albeit modest recovery from the second half of this year,” said Monetary Affairs Commissioner Joaquin Almunia.

Sixteen countries use the euro, a group now forecast to suffer a 1.9 percent economic contraction this year. Only in November it was thought the eurozone would just stay in the black in 2009.

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tags: Economy, EU Commission, Eurozone