Thursday, November 10, 2011

Risk of recession in the euro area, according to the European Commission

The European Commission said Thursday that the eurozone was likely to plunge into recession in 2012 if it failed to stem the debt crisis.
'exĂ©cutif The European Union announced that it expected a growth of only 0.5% of gross domestic product (GDP) in the euro area in 2012 (0.6% in the EU), while it was still 1.8% in the spring. He then expects a return to slow growth of about 1.5% by 2013.
Unemployment at 9.5%
This forecast is in fact a last call to start. The growth in Europe has stopped and we could see a new recession , "warned the monetary affairs commissioner, Olli Rehn, adding that unemployment is expected to remain its current high of about 9.5%.
For France, the Commission envisages a growth of 0.6% for 2012 and 1.4% in 2013, an inflation of 1.5% in 2012 (against 2.2% this year), unemployment at 10% (9 , 8% in 2011) and a budget deficit of 5.25% of GDP, "far beyond the official target slightly revised from 4.5% of GDP "but" without consideration of possible additional measures. "
The debt crisis now threatens to spread to Italy, the third largest economy of the 17 countries in the euro area, which sees fly its interest rates on bonds beyond the critical threshold of 7 % unsustainable in the long term. At this level, Greece, Portugal and Ireland could not borrow on the markets and were forced to seek financial assistance from the European Union and the International Monetary Fund (IMF).
Markets calmed in Italy
Markets, however, seemed somewhat appeased Thursday by the prospect of a resignation of prime minister Silvio Berlusconi in the next few days and possible designation of the economist and former European Commissioner Mario Monti's estate. Italy, in debt up to 120% of its GDP, has promised to return to balanced budgets by 2013, but it does so by implementing austerity measures and boost economic growth.
Olli Rehn also warned that if five states-Belgium, Cyprus, Hungary, Malta and Poland, did not put quickly implement additional measures of budgetary control, it would use the new powers of sanction which should come into force by mid-December. " In my case, I will begin to use the first day the new rules on economic governance , "he said.
The penalties for countries exceeding the limits of budget deficit and debt will be more automatic to prevent a worsening of the debt crisis.
Moreover, the former vice-president of the European Central Bank and former governor of the Central Bank of Greece Lucas Papademos, 64, will be the next Prime Minister of Greece, according to the Greek news agency Ana.
Photo: European Commission headquarters in Brussels.
Sources: Associated Press 

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