The European Commission has retracted its previous predictions on the Eurozone recession stating that record unemployment levels and lessened bank lending are to blame for the poor economic recovery.
The executive body of the EU claims that there has not been enough bank lending to businesses and households that when combined with record unemployment levels is preventing the recovery from occurring at the faster pace that was expected.
As of now it is predicted that the eurozone will stay in a recession throughout 2013 with nations such as Spain and France both missing their debt targets for the year. Originally the European commission believes that the 17th country bloc would finally exhibit some growth during 2013.
In 2013 eurozone unemployment is expected to reach a peak high of 12% which would mean over 19 million people without jobs. The worst hit countries will likely be Spain and Greece both of which have projected jobless rates of as much as 27%.
The new estimates show the widening gap between France and Germany which are considered to have the two largest economies in the bloc. France is getting closer to the periphery as its economy is barely able to hit a .1% growth margin whereas Germany is likely to grow by .5%.
This is bad news for businesses in the UK because the eurozone is the largest trading partner of Britain and it was hoped that exports would help to boost Britain’s finances. However, if the Eurozone continues to stall it is not likely that exports are going to increase much for the UK either.
The tourism industry in Britain will also be hurt once again instead of recovering as many Europeans will choose to stay home instead of wandering into the nation for their holidays.