EU lowers UK recovery forecast

Date: Thursday 25 Feb 2010

Britain has had its economic growth estimate for 2010 revised downwards by the European Union.

The European Commission now expects UK GDP to grow by 0.6% in 2010, a reduction from its previous forecast of 0.9%. The Commission also expects inflation to hit 2.4% this year.

"The UK stands out as the only large member state for which growth has been revised downwards," Olli Rehn, the EU's Economic and Monetary Affairs Commissioner, said in a statement.

Higher VAT rates and the weak fourth quarter prompted the downgrade, he said.

"The impact of the January 2010 reversal of the VAT cut and poor January weather are likely to depress private consumption in the first quarter."

The Commission expects British GDP to grow by 0.2% up to June, before rising by 0.3% between July and September and reaching 0.4% in the quarter

It left its predictions for the European Union unchanged at 0.7% this year despite the worries about the impact of the crisis in Greece.

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