Macro concerns lead to a cut in eurozone growth forecast

China's slowdown, instability in the Middle East and a downturn in emerging economies will all affect the bloc

Macro concerns lead to a cut in eurozone growth forecast

Rui Roda, Flickr

The European Commission has cut its forecast for economic growth in the eurozone this year.

It has cut its prediction for the 19-country bloc in 2016 to 1.7% from the 1.8% it had forecast in November.

That figure would still mark a moderate increase from the figure of 1.6% in 2015.

The Commission said government spending had been unexpectedly high because of the number of migrants arriving in Europe.

"Risks to the economy are becoming more pronounced and new challenges are surfacing - slower growth in China and other emerging market economies, weak global trade as well as geopolitical and policy-related uncertainty," the Commission said in a statement.

UK

In a sign of growing concern about the British recovery, the Bank of England voted unanimously to leave the official borrowing rate on hold at 0.5%, with one Monetary Policy Committee member saying he was no longer in favour of a hike.

It comes amid growing speculation that the next move in borrowing costs could be down rather than up.

In its quarterly Inflation Report, the British central bank cut its forecast for economic growth this year from 2.5% to 2.2% and reduced its 2017 projection from 2.7% to 2.4%.

It also cut its forecast for CPI inflation from 1.5% this year to 1.2%.

 

Additional reporting by IRN