EU: Economic contraction will be worse than expected

EU: Economic contraction will be worse than expected
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The European Union is predicting the bloc’s economy will contract more than initially expected due to coronavirus-related lockdowns as their summer economic forecast paints a significantly grimmer picture than their spring forecast did.  

According to the latest predictions released Tuesday, the 27-nation EU's economy will contract by 8.3 percent this year, followed by 5.8 percent growth in 2021. Their spring forecast, released in early May, predicted a 7.5 percent economic contraction this year, followed by 6 percent growth in 2021.

The 19 EU nations that use the euro as their currency are predicted to see a record economic decline of 8.7 percent this year, and growth of 6.1 percent in 2021. In May, a 7.8 percent drop was expected for that group in 2020, followed by 6.3 percent growth next year.

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The EU said the economic forecast dropped more than initially expected this year because “the lifting of lockdown measures is proceeding at a more gradual pace than assumed” in the spring. 

EU Economy Commissioner Paolo Gentiloni urged the commission to quickly reach an agreement on the 750 billion-euro stimulus package proposed earlier this year. 

“The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity,” Gentiloni said in a statement. “This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time.”