Thursday, February 23, 2012

The euro-zone economy will fall back into recession at the start of this year and is now expected to contract in 2012 as a whole, the European Commission warned Thursday.

The new gross-domestic-product forecasts will add to concerns about the impact of broad-based regional austerity plans. The 2012 forecasts for Italy, Spain and Greece were all slashed—all countries that are implementing fiscal-consolidation measures.

But European Union Economics Commissioner Olli Rehn said EU finance ministers agreed at their last meeting that sticking to the path of overhaul and austerity is imperative.