Economists surveyed by the European Central Bank (ECB) have cut their forecast for eurozone growth this year due to the expected economic impact of a war in Iraq. The economists, who took part in the bank's Survey of Professional Forecasters, cut their GDP forecast to 1.4pc from 1.8pc. "This downward revision of growth prospects for 2003 seems to be the result of high uncertainty mainly associated with geopolitical tensions which are affecting the global economic and financial situation," the ECB said in its February monthly bulletin.
The Bank of England yesterday slashed its 2003 growth forecast for the UK to 2.5pc from 3.1pc. The ECB forecasters also trimmed their projection for 2004 growth to 2.3pc from 2.5pc and there were hints last night that the ECB may cut interest rates again. John Hurley, president of the Irish central bank, said that inflation could fall by more than expected giving the ECB "some room for manoeuvre" on interest rates. The ECB last cut interest rates by half a percentage point in December. Inflation forecasts for 2003 were left unchanged at 1.8pc, but the projection for 2004 inflation was lowered to 1.8pc from 1.9pc. //www.fxcentre.com