Eurozone recession ‘will be deeper than forecast’

Europe’s economy will contract more sharply this year and take longer to recover from the coronavirus pandemic than previously expected, piling pressure on EU leaders to finalize plans for a huge recovery package.

The eurozone economy will sink deeper into recession than previously thought due to the effects of the pandemic, the European Commission (EC) has said.

The European Commission Says more that it expects the EU economy to shrink 8.3% in 2020, considerably worse than the 7.4% slump predicted two months ago. Growth next year is expected to be “slightly less robust” than previously thought, with GDP seen expanding by 5.8%.

The bloc will contract a record 8.7% this year before growing 6.1% in 2021. It compares with the EC’s May forecast of a 7.7% slump and 6.3% growth. France, Italy and Spain will struggle the most, the EC said.

Its revised forecast comes amid concerns about the US economy after a surge in infections, BBC reported.

This has prompted several states to delay or reverse lifting restrictions.

Commission Valdis Dombrovskis said in a statement: “The economic impact of the lockdown is more severe than we initially expected.

“We continue to navigate in stormy waters and face many risks, including another major wave of infections.”

The Commission revised its previous forecasts because lifting coronavirus lockdown measures in eurozone countries was taking longer than it had initially thought.

Earlier growth forecasts for France, Italy and Spain were cut after they were hit hard by the pandemic, and the EC now expects downturns higher than 10% this year in each nation.

By contrast, Germany, which had fewer Covid-19 deaths, will have a 6.3% contraction, less pronounced than May’s forecast of 6.5%.