In euro zone, a bleak economic outlook turns darker - by Eric Reguly

Eurozone

A deeply troubled Europe faces two years of even weaker-than-expected economic growth that will lack the heft to ease its high jobless rates.

The European Central Bank now sees the euro zone economy contracting by 0.5 per cent this year, slightly worse than its original projection of 0.4 per cent. The new 2013 forecast for the 17-nation group calls for a contraction of 0.3 per cent, compared with an earlier projection of 0.5-per-cent growth, while 2014 would see growth of 1 per cent.

The ECB’s new outlook, unveiled Thursday as the central bank held its benchmark lending rate at 0.75 per cent, came one day after Britain’s Office for Budget Responsibility also lowered its projections through to 2014. These new forecasts suggest Europe faces a tough slog over the next couple of years, with growth too weak to bring down unemployment, which stands at 11.7 per cent in the euro zone and 7.8 per cent in Britain.

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