Eurozone is 'flying with one engine' Disaster looms for EU, warns chief economist

EUROPE's spluttering economy is equivalent to a plane "flying on one engine" a leading rating agency has warned, as it slashed growth projections for the bloc.

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Growth for the eurozone economy has been downgraded again

The wind has been knocked out of the finances of the single-market this year amid fears over a global crisis triggered by China's slowdown and low oil prices, according to Standard and Poors (S&P).

Estimates from the agency are the eurozone economy will now grow just 1.5 per cent this year, down from a previous forecast at the end of last year of 1.8 per cent.

The continent has been particularly vulnerable to global shocks because it has been solely reliant on consumer consumption for growth - just one engine to power the recovery, said S&P.

The agency's chief economist for Europe, the Middle East, and Africa, Jean-Michel Six said "it's been essentially a single-engine, consumer recovery."

He added: "A recovery that mainly relies on one cylinder is by definition suspicious: It could quickly grind to a halt, as it did in the previous cycle in 2010-2011.

"Or, it could be a flash in the pan, caused simply by a one-off drop in household energy bills."

European Central Bank cuts main interest rate to zero to try to lift eurozone economy

The latest slowdown is another blow to Europe's long-term recovery, which has failed to reach pre-crisis levels amid battles with high unemployment and sluggish growth.

Even by next year the continent will still be struggling to gain momentum with growth of only 1.6 per cent, forecasted S&P.

Mr Six said a stronger euro is likely to dent the prospect of international demand for its goods over the next couple of years.

The expert also underlined fears that the European Central Bank lacks power to drag the economy into a higher gear.

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ECB head Mario Draghi recently announced more stimulus measures for the eurozone

It comes after the Bank launched a fresh round of stimulus measures earlier this month aimed at kick-starting growth.

Unemployment should ease to 10.2 per cent this year, from 10.9 per cent last year, said S&P - but this is still high by historic standards and almost double Britain's jobless rate.

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