EU Commission lowers expectations over sluggish growth

Euro zone economic growth in the second quarter came in at a sluggish 0

Euro zone economic growth in the second quarter came in at a sluggish 0.3 per cent, the European Commission said today, adding that the rest of the year would see little expansion.

The figures were announced as European Union finance ministers prepared for talks in Copenhagen on growth, budgets and the possibility of rising unemployment.

The Commission, reiterated that the slower-than-expected growth should not cause changes to economic policy, although Belgium saw growth for the whole of the year being slower than forecast.

"For the doom and gloomers among us there is every reason to be gloomy for the third quarter," said BNP Paribas euro zone economist Mr Ken Wattret.

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He spoke after EU statistics agency Eurostat said second quarter growth was just 0.3 per cent on the previous quarter, at the bottom end of its forecast range of 0.3 to 0.6 per cent.

First quarter euro zone data was revised up slightly, to 0.4 per cent quarterly growth from 0.3 per cent. The year-on-year figure was 0.6 per cent growth after 0.3 per cent in Q1.

At the same time, the European Commission scaled back its expectations for the rest of the year.

Fourth quarter growth was also seen at 0.3-0.6 per cent.