SOD - Mar 10

The European Union’s prospects of returning to economic growth next year are “highly uncertain”, according to a policy paper to be approved today by EU finance ministers.

In a frank assessment of the depth of Europe’s recession, the document obtained by the Financial Times states that unemployment will rise sharply this year and in 2010, and the 16-nation eurozone will have to tackle persistent gaps in business competitiveness among its member states.

The policy paper paints a darker picture of the EU’s outlook than forecasts published in January by the European Commission, which spoke of a gradual economic recovery in the course of next year.

The Commission said gross domestic product was expected to fall by 1.8 per cent in the 27-nation bloc this year but would expand by 0.5 per cent in 2010.

In further evidence that the economic mood has worsened since January, the European Central Bank last week revised downwards its 2010 growth forecast for the eurozone countries from 1 per cent to zero growth.