BRUSSELS — A top E.U. official warned Friday that the economy of the euro area would shrink for the second year in a row and that countries like France and Spain would miss fiscal targets meant to ensure the stability of the common currency.
Olli Rehn, the European commissioner for economic and monetary affairs, forecast growth across the 27-nation European Union of just 0.1 percent this year and a contraction of 0.3 percent among the 17 countries in the euro zone.
Mr. Rehn’s presentation signaled “another year of falling output and rising unemployment in store in 2013,” said Tom Rogers, a senior economic adviser at Ernst & Young.
Prospects for growth in many parts of the Union were “very disappointing,” Mr. Rehn acknowledged at a news conference, where he presented a so-called winter economic forecast prepared by his department at the European Commission, the Union’s administrative arm.
“The ongoing rebalancing of the European economy is continuing to weigh on growth in the short term,” Mr. Rehn said.
Just three months ago, the commission forecast that the euro area economy would grow by 0.1 percent this year.
Mr. Rehn said the European economy should resume expanding in 2014, with growth reaching 1.6 percent across the Union and 1.4 percent in the euro area.
But the downbeat forecast, coming a day after data showed that a slump in business activity in the euro area worsened unexpectedly this month, added to perceptions that Europe continues to struggle to stimulate growth while cutting spending to pare deficits.
The commission also forecast that unemployment would continue to rise in the euro area this year, to 12.2 percent, up from 11.4 percent in 2012.
In Spain, the commission said it expected joblessness to hit 26.9 percent, up from 25 percent last year. In Greece, the forecast was for unemployment to leap to 27 percent from 24.7 percent a year earlier.
Even in buoyant Germany, which is expected to grow this year by 0.5 percent, unemployment was seen nudging up slightly this year to 5.7 percent from 5.5 percent in 2012.
The litany of grim figures will add fuel to a furious debate over whether an insistence on austerity is creating a self-perpetuating cycle where cuts to state spending to meet E.U. targets diminish demand, weakening tax revenue and further straining government finances.
Yet blaming the effects of belt-tightening for Europe’s continued economic woes, particularly in the case of Spain, is too simplistic, said Guntram B. Wolff, the deputy director of Bruegel, a research organization.
“Perhaps the real reason for the deterioration in the economic situation in Europe was the massive drop in confidence of international investors in the ability of the euro area to overcome its more systemic problems,” Mr. Wolff wrote in a blog posting shortly after Mr. Rehn’s news conference.
The commission said Spain’s deficit was expected to fall to 6.7 percent of gross domestic product this year, down from 10.2 percent in 2012, partly because of tax increases and a sharp reduction in year-end bonuses for public-sector workers. But that still fell wide of the official target of 4.5 percent, and the commission warned that Spain’s deficit could rise to 7.2 percent in 2014.
In the case of France, the commission attributed economic stagnation to declining household spending linked to rising unemployment — which the report said was expected to reach 10.7 percent in 2013, then climb to 11 percent in 2014, up from an estimated 10.3 percent in 2012. In addition, the report cited a drop in confidence among French entrepreneurs.
The report forecast that the French budget deficit for 2013 would be 3.7 percent of G.D.P., down from an estimated 4.6 percent in 2012, but well above the government’s official target of 3 percent. The commission also warned that the deficit could rise to 3.9 percent in 2014.
In a sign of flexibility, Mr. Rehn said deadlines for meeting budgetary targets could be extended in the cases of France and Spain, assuming their governments could demonstrate progress in implementing fiscal reforms despite the unexpectedly tough economic environment.
Euro Watch: European Commission Offers Grim Forecast for Economy
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Euro Watch: European Commission Offers Grim Forecast for Economy
