PARIS — The latest Brussels economic forecast indicates Europe is not yet out of its economic troubles.
The European Commission delivered statistics on Friday that predict growth for the 27-member European Union at only 0.1 percent — down from its previous forecast of 0.4 percent — but that the outlook for the 17-member currency union, the eurozone, has been revised downwards. The EU's executive arm says the currency union will contract by 0.3 percent in 2013, compared to its earlier estimate of a small, 0.1 percent growth.
"The current situation can be summarized like this: We have disappointing hard data from the end of last year, some more encouraging softer data from the recent past, and growing investor confidence in the future," said Olli Rehn, European Commissioner for Economic and Monetary Affairs and the Euro, and the commission's vice president.
"The decisive policy action undertaken recently is paving the road to recovery," he added, explaining that Europe's economic reforms are working. "We must stay the course of reform and avoid any loss of momentum which could undermine the turnaround in confidence that is now underway, delaying the needed upswing in growth and job creation."
While not surprising, some of the more disappointing data came from France. Europe's second largest economy is expected to grow only 0.1 this year, while unemployment is forecast to reach 10.7 percent.
As expected, the commission predicted France's Socialist government will miss the EU's 3 percent deficit target, reaching an expected 3.7 percent this year and 3.9 percent in 2014.
French Prime Minister Jean-Marc Ayrault has rejected more austerity measures. Either way, the government's policies have sparked criticism from both conservatives and the far left.
Far left French politician Jean-Luc Melenchon told French Radio that the government had fallen into the quicksands of European austerity — just like struggling economies Spain and Portugal.
Europe's largest economy, Germany, is expected to grow 0.5 percent this year and the British economy by 1 percent. But the economies of Spain and Italy are expected to contract. And eurozone unemployment will likely climb to 12.2 percent in 2013, before falling slightly next year.