The eurozone economy is on the brink of recession and pressure is mounting on the European Central Bank to cut interest rates. According to a flash estimate from statistics office Eurostat, the eurozone economy recorded zero growth in the first quarter of the year after growing by just 0.1pc in the fourth quarter of 2002. The prospects for growth over the coming quarters are not so bright, as separate figures this morning revealed that both the German and Italian economies contracted in the first quarter of the year. Germany, the eurozone's largest economy, is now mired in a recession, technically defined as two consecutive quarters of negative growth.
The European Commission cut its forecast for eurozone GDP growth in the second quarter to a range of between zero and 0.4pc from 0.1pc to 0.4pc. "Most indicators used in the model for this horizon reflect slack in growth in terms of both domestic and foreign demand," it said. The European Central Bank (ECB) left interest rates on hold at its meeting earlier this month amid calls from analysts to lower rates by at least 50 basis points, but it is now expected to ease policy in June. ///www.fxcentre.com