Europe is facing the risk of a new recession, as the recovery of its economy has stopped, the European Commission has warned. "Growth has stalled in Europe, and there is a risk of a new recession. While jobs are increasing in some member states, no real improvement is forecast in the unemployment situation in the EU as a whole. The key for the resumption of growth and job creation is restoring confidence in fiscal sustainability and in the financial system and speeding up reforms to enhance Europe's growth potential. There is a broad consensus on the necessary policy action. What we need now is unwavering implementation,” said Olli Rehn, Commission Vice-President for Economic and Monetary Affairs.

GDP in the EU is now projected to stagnate until well into 2012, while growth for the whole of 2012 is forecast at about 0.5 percent. By 2013, a return to slow growth of about 1.5 percent is expected. No real improvements are projected for labour markets, and unemployment is forecast to remain at the current high level of around 9.5 percent. Inflation is set to return below 2 percent over the coming quarters. Fiscal consolidation is forecast to progress with public deficits set to decline to just above 3 percent by 2013 under an assumption of unchanged policies, the EC has announced.

The full EC statement here.

editor@romania-insider.com