EU cuts its growth forecast over sluggishness of economies and risk of Brexit
The European Commission has cut its growth forecasts yet again, reflecting sluggish manufacturing in its German economic heartland and the rising risks of Brexit and a trade war with the US.
Even as it trimmed its eurozone economic growth forecasts for next year to 1.4% from the 1.5% it believed was possible in its projections made in May, it said it expected the Irish economy to grow by 3.4% in 2020 after 4% this year.
"The resilience of our economies is being tested," European Commission vice president Valdis Dombrovskis said yesterday.
The Commission forecasts the German economy will expand by 0.5%, while Italy will continue to tread the cusp of recession with growth of just 0.1%.
The lower growth forecasts for 2020 come as the world's leading central banks, the European Central Bank included, are expected to start cutting interest rates and resume their purchases of government bonds in an effort to boost economic growth.
US President Donald Trump has hit China with hefty tariffs and imposed smaller ones on Europe in a dispute between aircraft makers Boeing and Airbus.
He also threatened tariffs on car imports, a move that would hit Germany hard and trigger tough EU retaliation.
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The risks of a hard Brexit are also growing and there was a stark reminder from Brexit Secretary Stephen Barclay that London would use its economic leverage over Dublin to push for concessions.
Meanwhile, research by the Department for the Economy warned that at least 40,000 jobs could be lost here in the event of a no-deal Brexit.
The new Commission forecasts made little mention of Brexit on Ireland, other than to warn the economic outlook here was "clouded by uncertainty". The Republic's Department of Finance and the Irish Central Bank have warned economic growth in the Republic could shrink to zero and 50,000 people could lose their jobs in a hard Brexit.