EU slashes its growth forecast amid fears of a ‘disruptive Brexit’, German slowdown and French protests
- European Commission is expecting 1.3 per cent growth in the eurozone this year
- The forecast is well down from the 1.9 per cent they projected last November
- Falling demand for German cars in China and French protests are among factors
The EU has slashed its growth forecast for the eurozone amid fears of a ‘disruptive’ Brexit alongside a slowing German economy and the wave of protests in France.
The European Commission is now expecting growth of 1.3 per cent in the eurozone this year, down from the 1.9 per cent it predicted in November.
‘The possibility of a disruptive Brexit creates additional uncertainty,’ said the commission’s vice president Valdis Dombrovskis.
The slowdown ‘reflects external factors, such as trade tensions and the slowdown in emerging markets, notably in China,’ he said.
‘Yellow Vest’ protesters stage a demonstration in Bordeaux, France, on the 12th consecutive Saturday of rallies last weekend. The protests have contributed to a European slowdown
EU chiefs are concerned about a possible no-deal Brexit, with no agreement yet in place just 50 days before Britain leaves on March 29.
UK Prime Minister Theresa May is battling to secure a deal but the House of Commons rejected her withdrawal pact and EU leaders have said they will not renegotiate it.
The health of the German economy is also fast emerging as a worry for the EU as slumping demand for foreign cars in China takes a toll on Europe’s export powerhouse.
In France Emmanuel Macron has had to put some of his economic reforms on hold and make expensive concessions after a wave of ‘Yellow Vest’ protests against his presidency.
The demonstrations began as a protest against high fuel prices but have escalated into a wider assault on Macron and his style of governing.
Green traffic lights shine above the city of Frankfurt, Germany. The European Commission is now expecting growth of 1.3 per cent in the eurozone this year
Another problem is Italy, which the commission said would grow by a paltry 0.2 per cent this year, still better than a recession, but a huge cut from the 1.2 per cent forecast late last year.
Slower growth spells big trouble for populist-led Italy, where huge amounts of government money are swallowed up each year to help pay down about two trillion euros in public debt.
Rome’s coalition government of the anti-establishment Five Star Movement (M5S) and the League party was already forced to water down its ambitious budget in December to avoid being punished by the EU Commission and financial markets.
The latest growth forecast may force Italy to again review its spending plans for 2019 in order to satisfy Brussels and assuage investors.