MercoPress. South Atlantic News Agency

Ireland and Spain forecasted to remain in recession well into 2011

Euro zone should begin recovery process next year

The European Union's economy is set to rebound in 2010, recording a growth rate of 0.7% before accelerating to a rate of 1.6% in 2011, the bloc's executive said Tuesday. However some economies will emerge from recession faster than others and among those lagging well into 2011 are Spain and Ireland.

Growth in the 16-member group of countries which use the Euro should reach 0.7% in 2010 and 1.5% in 2011, the European Commission said.

The rebound is set to follow one of the bloc's worst recessions in decades, with GDP estimated to have dropped by 4% in the Euro-zone and 4.1% in the EU this year.

Europe's economic locomotive, Germany, is set to post a GDP growth rate of 1.2% in 2010 and 1.7% in 2011, compared to a drop of 4% in 2009.

Of the EU 27 member states, eight - including Spain and Ireland - are only set to come out of recession in 2011. United Kingdom is expected to outpace Euro-zone average.

The EC is expected to use its latest estimates to argue that EU member states should start trimming their soaring budget deficits as of 2011, something which national capitals are reluctant to do.

“Having experienced the deepest, longest and most broad-based recession in its history, the EU economy has reached a turning point” a commission press release said.

But unemployment is expected to jump next year as businesses continue to struggle with lingering financing problems and the tail end of the recession.

The percentage of people without jobs is set to increase by roughly one-third compared with the figure in 2008, up to 10.7% in the Euro-zone and 10.3% in the EU as a whole.

Most governments will have little margin to cope with the rising unemployment figures, because the commission estimates that state borrowing has trebled over the last year, from 2.3% of EU GDP in 2008 to 6.9% in 2009.

That figure is set to climb still further, to an average EU budget deficit of 7.5% of GDP in 2010 - smashing the EU rule that governments should limit their deficits to 3% of GDP. All four of the EU largest economies are set to breach that rule. Britain's deficit, one of the worst in Europe, is set to reach 12.9% in 2010, while France's should reach 8.2%, Italy's 5.3% and Germany's 5%.