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EC warns euro area about debt as it cuts inflation forecast

Published Tue, May 3, 2016 · 09:50 PM
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Brussels

THE European Commission (EC) told the euro area's largest economies to reduce debt and modernise labour markets as it again slashed its inflation forecast and warned of slower-than-predicted growth across the 19-nation bloc.

France, Spain and Italy, which have persistently failed to hit European Union (EU) budget targets, are still off track, the Brussels-based commission said on Tuesday. Gross domestic product (GDP) in the currency area will increase by 1.6 per cent this year and 1.8 per cent in 2017 - both 0.1 percentage-point lower than the commission forecast in February. Inflation will average 0.2 per cent this year, below the European Central Bank's (ECB) target.

"Decisive policy action to reform and modernize our economies is the only way to ensure strong and sustainable growth, more jobs and good social conditions," European Commission Vice-President Valdis Dombrovskis said. "High levels of public and private debt, vulnerabilities in the financial sector or declining competitiveness" remain the b…

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