The European Commission has today announced its revised prediction for Eurozone growth over the coming months, after recent market volatility and poorer than expected economic results from some of the region’s major economies.

The Commission, based in Brussels, has predicted that the 13-nation Eurozone economy will grow by around 2.5% through the remainder of 2007. Previously, the Commission had forecast a 2.6% growth, below the 2.7% growth figure for the year 2006 reflecting a wider slowdown in Eurozone economic activity.

On top of the news of the slowdown, the Commission also forecast that the poor growth figures could worsen over the course of 2008, seeing a significant blow for the European economy over the next twelve months.

Recent market upset stateside had caused European mortgage lenders to adopt a more risky lending outlook. Additionally, with stock markets in turmoil, business investment has been less readily available throughout the Eurozone over the last few months, which has led to this downwards revision in growth.

European banks fearing over exposure to the sub-prime sector have withheld business investment, which has seen a major downturn in corporate activity over the year. With liquidity a premium, businesses and consumers across the world, and indeed the Eurozone, are finding it harder to raise finance from lending institutions.

Additionally, with France and Germany announcing sluggish growth over the second quarter of 2007, it had begun to look unlikely that previous growth figures would be realistic over the latter half of this year.

The slower economic growth has done nothing to dampen the spirits of stock market trading, which was buoyed across Europe and the US in light of positive American economy news and a shock OPEC announcement that oil production is to rise over the latter half of this year. However, it remains to be seen whether the downturn will have an adverse effect on trade tomorrow.

Tags: European Economy News, European Union News //