Eurozone economy expected to shrink further in 2013

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The eurozone economy is expected to shrink further in 2013, according to the EU's latest economic forecast.

Presenting the latest set of figures on 22 February 2013, Economic and Monetary Affairs Commissioner Olli Rehn admitted that measures to improve economic governance have "yet to feed through to the real economy".

He said that ongoing "rebalancing" of economies across the EU to reduce levels of public deficit was weighing down on attempts to boost economic growth.

The figures show that a number of countries, including France, are expected to miss their EU-imposed targets of bringing down public deficit to a maximum of 3% of GDP.

Although the eurozone economy is set to contract in 2013, the economy of the EU as a whole is expected to show a very small rise of 0.1%

Commissioner Rehn warned that there were increasing differences between countries, with falling unemployment and increased growth in countries such as Germany, but further economic difficulties in many southern European countries including Portugal and Spain.

Unemployment forecasts for 2013 range from 27% in Greece and 26.9% in Spain down to 5.4% in Luxembourg and 4.5% in Austria.

Meanwhile economic growth forecasts range from a contraction of -4.4% in Greece to growth of 3.8% in Latvia.

UK unemployment is forecast at 8%, with expected economic growth of 0.9% in 2013 and 1.9% in 2014.

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