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| E.U. Lowers Growth Forecasts | E.U. Lowers Growth Forecasts |
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| BRUSSELS — The European Union on Tuesday sharply lowered growth forecasts as member states like France, Germany and Italy showed weak economic performance, and as business confidence suffered from heightened geopolitical risks. | BRUSSELS — The European Union on Tuesday sharply lowered growth forecasts as member states like France, Germany and Italy showed weak economic performance, and as business confidence suffered from heightened geopolitical risks. |
| Growth is now expected to reach 1.3 percent in the 28-member bloc this year, said the European Commission, the union’s executive arm, down from its forecast in the spring of 1.6 percent. The commission also cut growth expectations in the 18-nation eurozone to 0.8 percent from a previous forecast of 1.2 percent. | |
| “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 accompanying the closely watched economic forecast. | “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 accompanying the closely watched economic forecast. |
| Lower-than-expected growth figures for the first half of the year were “mainly due to weakness in some advanced and emerging economies,” said Mr. Katainen, also citing rising tensions in Ukraine and the Middle East. | Lower-than-expected growth figures for the first half of the year were “mainly due to weakness in some advanced and emerging economies,” said Mr. Katainen, also citing rising tensions in Ukraine and the Middle East. |
| Italy appeared to stand out as a poor performer: Its economy was predicted to shrink 0.4 percent this year compared with a forecast in May for growth of 0.6 percent. Britain was expected to have one of the highest growth rates, at 3.1 percent, behind Ireland, at 4.6 percent. | |
| The gloomier outlook for 2014 and 2015 will most likely raise expectations for the European Central Bank to take additional steps to stimulate the economy, though economists said they did not expect policy makers to take action at a meeting on Thursday. | The gloomier outlook for 2014 and 2015 will most likely raise expectations for the European Central Bank to take additional steps to stimulate the economy, though economists said they did not expect policy makers to take action at a meeting on Thursday. |
| Some of the downgrades for 2015 were drastic. The commission lowered its forecast for growth in Germany to 1.1 percent from an estimate of 2 percent this past May; in France, the figure was lowered to 0.7 percent, from 1.5 percent. | |
| The commission also expressed concerns about inflation, which it said would remain very low this year and would not come close to the target of just under 2 percent anytime soon. It projected an annual inflation rate of 1.6 percent in the European Union in 2016. | The commission also expressed concerns about inflation, which it said would remain very low this year and would not come close to the target of just under 2 percent anytime soon. It projected an annual inflation rate of 1.6 percent in the European Union in 2016. |
| The lower forecasts, especially in the euro area, are a measure of how quickly optimism about a recovery has dissipated, as France has failed to grow as hoped and Italy struggles to make overhauls. There are also signs that the German economy is stalling. | The lower forecasts, especially in the euro area, are a measure of how quickly optimism about a recovery has dissipated, as France has failed to grow as hoped and Italy struggles to make overhauls. There are also signs that the German economy is stalling. |
| Germany is expected to post growth of 1.3 percent this year, down from an earlier forecast of 1.8 percent. | Germany is expected to post growth of 1.3 percent this year, down from an earlier forecast of 1.8 percent. |
| Among the issues is the prospect of a “new cycle of sanctions and countersanctions” related to the sanctions that the United States and the European Union imposed on Russia in retaliation for its role in Ukraine, and the reciprocal sanctions from Moscow, European Union officials said. | |
| Those tensions “could pose a larger roadblock to European growth prospects than currently envisaged in the forecast,” the report said. | |
| The tensions might also “have triggered a wait-and-see attitude among firms,” the officials wrote in a section of the report that focused on Germany. | |
| The French economy is expected to grow 0.3 percent this year, instead of an earlier estimate of 1 percent. | The French economy is expected to grow 0.3 percent this year, instead of an earlier estimate of 1 percent. |
| “With confidence indicators declining since midyear and now back to where they were at the end of 2013, and hard data pointing to very weak activity for the rest of the year, it is becoming harder to see the dent in the recovery as the result of temporary factors only,” officials wrote in their report. | “With confidence indicators declining since midyear and now back to where they were at the end of 2013, and hard data pointing to very weak activity for the rest of the year, it is becoming harder to see the dent in the recovery as the result of temporary factors only,” officials wrote in their report. |
| The commission said it expected growth rates to improve somewhat in 2015, rising to 1.5 percent in the European Union and to 1.1 percent in the eurozone. | The commission said it expected growth rates to improve somewhat in 2015, rising to 1.5 percent in the European Union and to 1.1 percent in the eurozone. |
| Even so, weaker-than-expected growth this year is likely to make it much harder for countries like France and Italy to achieve the bloc’s mandated targets to keep budget deficits and government debt in check. | Even so, weaker-than-expected growth this year is likely to make it much harder for countries like France and Italy to achieve the bloc’s mandated targets to keep budget deficits and government debt in check. |
| “Despite significant expenditure cuts, France’s general government deficit and its debt-to-G.D.P. ratio are expected to continue rising,” officials warned in their report. In the case of Italy, officials were optimistic that “accelerating external demand is expected to drive a fragile recovery in 2015.” | “Despite significant expenditure cuts, France’s general government deficit and its debt-to-G.D.P. ratio are expected to continue rising,” officials warned in their report. In the case of Italy, officials were optimistic that “accelerating external demand is expected to drive a fragile recovery in 2015.” |
| France and Italy could face disciplinary action and steep fines if they fail to show that they are making sufficient effort to bring their economies in line with European budgetary rules. Mr. Katainen said those recommendations would be published at the end of this month. | France and Italy could face disciplinary action and steep fines if they fail to show that they are making sufficient effort to bring their economies in line with European budgetary rules. Mr. Katainen said those recommendations would be published at the end of this month. |
| Over all, the commission said, the most recent figures indicate a slow fading of the legacy of the sovereign debt crisis, with many member states still weighed down by high unemployment, high debt and low output. | Over all, the commission said, the most recent figures indicate a slow fading of the legacy of the sovereign debt crisis, with many member states still weighed down by high unemployment, high debt and low output. |
| That prompted Mr. Katainen, the commission vice president, to call on member states to agree on plans to bolster demand with a significant spending effort. | That prompted Mr. Katainen, the commission vice president, to call on member states to agree on plans to bolster demand with a significant spending effort. |
| “We will put forward a 300 billion euro investment plan to kick-start and sustain economic recovery,” he said, referring to a proposal worth $375 billion. “Accelerating investment is the linchpin of economic recovery,” he added. | “We will put forward a 300 billion euro investment plan to kick-start and sustain economic recovery,” he said, referring to a proposal worth $375 billion. “Accelerating investment is the linchpin of economic recovery,” he added. |