EU lowers euro zone 2016 growth and inflation forecasts

The Commission also warned of the need to cut debt and modernise labour markets

Euro zone GDP is forecast to grow by 1.6% this year Pic: Getty

The European Commission told the euro zone’s largest economies to reduce debt and modernise labour markets as it again slashed itsinflation forecast and warned of slower-than-predicted growth across the 19-nation bloc.

France, Spain and Italy, which have persistently failed to hit European Union budget targets, are still off track, the Brussels-based commission said. Gross domestic product (GDP) in the currency area will increase by 1.6 per cent this year and 1.8 per cent in 2017 – both a full percentage point lower than the commission forecast in February. Inflation will average 0.2 per cent this year, below theEuropean Central Bank’s target.