The European economy will “grind to a standstill” next year, the European Commission warned today.
EU-wide economic growth of 2.9 per cent in 2007 will more than halve to 1.4 per cent by the end of this year and plunge to just 0.2 per cent in 2009, according to the autumn forecast on the situation in the 27 member states.
Unemployment is expected to rise by about 1 per cent next year after being at its lowest for a decade.
"The economic horizon has now significantly darkened as the EU economy is hit by the financial crisis that deepened during the autumn and is now taking a toll on business and consumer confidence," said EU Economic and Monetary Affairs Commissioner Joaquin Almunia.
He said emerging economies were holding up better than the EU or America, but were unlikely to escape unscathed.
And he called for co-ordinated EU action to support the economy, just as member states had co-operated to bail out the financial sector.
The sharp drop in growth to 1.4 per cent this year compares with just 0.9 per cent in the UK as the economy slows.
Today's forecast predicts a gradual UK recovery in 2010 to annual growth of about 0.5 per cent — compared with average growth across the EU recovering to 1.1 per cent in 2010.
In 2007 EU economic growth was running at 2.9 per cent, with six million new jobs created in 2007-2008.
A Commission statement today warned bluntly: "In 2009 the EU economy is expected to grind to a standstill."
Reuters