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2011-12-15 04:10:48
The eurozone is facing a "bleak" winter, audit firm Ernst & Young says.
A "mild" recession is likely in the first half of next year, leading to
economic growth of just 0.1% for the whole of 2012, it predicted.
Ernst & Young also said unemployment in the eurozone was unlikely to fall below
10% until 2015.
Meanwhile, Greece - Europe's most indebted country - said that it was on course
to have its worst recession ever in 2011.
Greek Prime Minister Lucas Papademos warned on Wednesday that his country's
contraction would be greater than the 5.5% currently forecast.
Greece's economy shrank by 4.5% in 2010, when it received its first bailout
from the EU and International Monetary Fund.
'Uncertainties'
Last week, 26 of the 27 members of the European Union backed new fiscal rules
to keep budgets in line, with only the UK abstaining.
But many fear that the budget pact will still not be enough to prevent more
countries from seeking a bailout.
On Wednesday, the euro fell below $1.30 for the first time since January.
"The reforms agreed at the summit on 9 December were a step in the right
direction and the response seems to have been mildly positive," according to
Ernst & Young.
"Yet investors remain very concerned about the commitment and ability of
eurozone governments to implement reforms quickly."
The audit firm predicts that eurozone growth will recover to between 1.5% and
2% in 2013.
"The uncertainties hanging over the Eurozone can only continue to dampen the
enthusiasm for European companies to make long term investment and recruitment
decisions," said Mark Otty, Ernst & Young's managing partner for Europe, Middle
East, India and Africa.