The Eurozone will be in a recession for longer than previously projected, according to global financial firm EY.
The firm’s EY Eurozone Forecast has economic recovery beginning in 2014, with GDP growing at about 1 percent. Unemployment will peak in early 2014 with 20.5 million, 12.7 percent of the workforce. The high unemployment will hold back consumer spending, and a weaker global economy will lower demand for European exports.
Meanwhile austerity has been much more damaging to the economy than predicted, according to the forecast, and now governments will have to focus on stimulating growth.
National and EU-level governments that pushed through structural reforms in the past could emerge stronger from the crisis, according to EY. The further easing of fiscal austerity will be a “significant factor” in assuring a recovery, as tightening will be the main roadblock to growth for countries like Greece. Estonia will see the greatest improvement, with 4.2 percent growth in GDP in 2014.
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