In February, the European Commission slashed eurozone growth forecasts, sparking fears over the bloc’s biggest economies. The Comission warned growth will slow to 1.3 percent from 1.9 percent in 2018 and while this is expected to rebound to 1.6 percent in 2020, the new estimates are less optimistic than previous forecasts. In November, Brussels said it expected eurozone growth to hit 1.9 percent this year and 1.7 percent in 2020.
But the biggest fears continue to be over Italy, which plunged into recession at the start of this year after its economy shrank further during the final three months of 2018.
The Commission warned Italy is expected to be the slowest growing economy in the EU, with expansion of just 0.2 percent this year.
In a further blow, the Italian Treasury is expected to announce next week the economy will expand to little over zero this year, according to Bloomberg, citing senior officials who referenced a draft report due for approval on April 10.
The report added the Italian Government is targeting a deficit of 2.3 or 2.4 percent of GDP, from a projected 2.04 percent previously forecast in its controversial budget.
According to Trading Economics, Italy recorded debt equivalent to 132.10 percent of the country’s GDP in 2018 – having averaged 111.62 percent from 1988 until last year.
Nathalie Yanson, professor of finance at NEOMA Business School in France, warned Italy is a much bigger threat to the eurozone than Greece, which sunk into a huge crisis from 2010 and has since been loaned £375billion (€320billion) by European authorities and private investors.
She told Express.co.uk: “Contrary to what was expected, the Euro has not significantly contributed to the economic convergence of the Euro-member countries.
“Italy is still the weak link and puts the stability of the Euro area at threat; a much bigger threat than Greece.”
Justin McQueen, market analyst at DailyFX, warned the EU will be becoming increasingly concerned by Italy’s worsening economic situation.
He told Express.co.uk: “The problem child of the Eurozone is Italy with much of the focus on the country’s expanding debt to GDP.
“With Italy currently in a recession, the country looks set to cut its GDP forecast for this year to 0.3-0.4 percent from the optimistic forecast of one percent.
“This in effect could see the deficit to GDP target rise to 2.3 percent from 2.04 percent, which in turn could ring the alarm bells for the EU over Italy’s excessive debt problem.”
Germany narrowly escaped tumbling into recession earlier this year, when GDP growth stalled at zero percent.
But concerns for the EU’s biggest economy have remained, particular after the country saw its growth forecast slashed by the country’s economic institutes in a damning new report.
This has been downgraded to 0.8 percent from a previous estimate of 1.9 percent, with the report warning a hard Brexit would blow a huge hole in the economy.
Germany also led a decline in manufacturing across the eurozone last month, with factories in the area recording their worst month for almost six years.
The PMI for manufacturing, which accounts for about a fifth of the economy, fell to an 80-month low reading of 44.1.
This is down from 47.6 in February and lower than the flash reading of 44.7.
Tory MP Sir John Redwood, also chief global strategist at investment firm Charles Stanley, told Express.co.uk: “The German economy, usually the strong leader of the Eurozone, has been badly hit throughout its manufacturing base.
“EU policies on vehicle emissions have damaged car demand, whilst the fall in car sales in the USA and China have also hurt. Today’s figures of an 8.4 percent fall in manufacturing orders over the last year shows how serious it is.”
The increasing struggles in Italy and Germany have led many experts to fear the eurozone has not been quick enough to respond to obvious warnings.
Sir John added:“The Eurozone has been slow to respond to the change of mood in world markets late last year, and to the warnings of slowdown and recession.
“They carried out their plan to end their money creation and bond buying programme and they persevere with their tough budget disciplines on Euro member states.”