BRUSSELS
By Hajer M'TIRI
The European Commission in a statement on Tuesday cut growth and inflation forecasts for the Eurozone for 2015.
The currency bloc is predicted to grow only 1.1 percent next year, down from a 1.7 percent forecast just six months ago.
“The economic and employment situation is not improving fast enough,” Jyrki Katainen, the European Commission vice president for jobs and growth, said in a statement.
“Accelerating investment is the linchpin of economic recovery,” Katainen added.
Katainen called on member states to agree on plans to bolster demand with a significant spending effort to avoid a prolonged period of economic stagnation across the region.
“We will put forward a 300 billion euro ($375 billion) investment plan to kickstart and sustain economic recovery,” he said.
France to miss targets
France, the second biggest EU economy, will not maintain its fiscal targets in the coming year, the Commission statement said.
The Commission forecasts a French deficit of 4.5 percent of GDP in 2015, and that will worsen in 2016 to 4.7 percent.
This would make France's public deficit the largest in the Eurozone in 2016. The numbers belie the French government's scenario of a drop back to a 3 percent deficit.
The Commission predicts a 4.4 percent deficit at the end of this year.
French economic growth will be 0.3 percent this year, 0.7 percent next year and 1.5 percent in 2016, according to the European Commission.
Government debt will reach 95.5 percent of GDP at the end of 2014, 98.1 percent at the end of 2015 and 99.8 percent in late 2016. Unemployment will stabilize next year at 10.4 percent of the workforce, the same as for this year and will fall to 10.2% in 2016, according to the forecast.
"Despite significant expenditure cuts, France’s general government deficit and its debt-to-GDP.ratio are expected to continue rising," European Union officials warned in their report.
Meanwhile, the French government is planning to reduce its public deficit to 4.3 percent of GDP next year and 3.8 percent in late 2016, to support economic growth of 1.0 percent next year and 1.7 percent in 2016.
In September, the French Finance Minister announced that France will miss a 2015 European commission target to bring its public deficit down to 3 percent, saying the country needs two more years.
Last year, the European Commission, dissatisfied with the state of public finances in France, granted the country two years to reduce its budget deficit to 3 percent of GDP by 2015 and zero percent after two years.
As for the third biggest economy, Italy, the Commission said it expects Rome to keep its headline deficit below the EU ceiling of 3 percent of GDP next year and to reduce it to 2.2 percent in 2016.
The Commission also expects Germany to see stable growth in the second half of this year. It sees growth of 1.1 percent in 2015 and 1.8 percent in 2016.
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