For 2020, it sees growth of 1.6 percent, down from 1.7 percent forecast earlier. The Eurozone banks had recovered after six straight session of losses, in the wake of a sagging economy and dovish ECB stance, posted a rise of 1.7 percent.
But it also mentioned internal factors as causes for the worsened outlook, notably slower vehicle production in Germany, social tensions in France and "strong uncertainty on budget policies in Italy", EU economics commissioner Pierre Moscovici told a news conference. That said, several of the EU's larger members are expected to experience a noticeable slowdown in their economies with both France and Germany becoming increasingly concerned about their budget policies and Italy officially entering into a recession. A raft of risks is stalking the European and global economies, including China's slowdown, a trade dispute between the USA and China that has created new import taxes, and the chance that Britain could leave the European Union in March in a chaotic fashion without approving a transition agreement.
This year's growth forecast for the whole of the European Union has also been cut to 1.5%, compared with 2% in November.More news: The Hubble Space Telescope discovers mysterious dark storm on Neptune
The Bank of England cut its growth forecast for the United Kingdom economy on Thursday, saying that damage from Brexit had increased. Nonetheless, following the reveal of the data, the BP shares rose by as much as 5.1 percent in the intra-day trading, posting their best day since September, 2016, meanwhile the oil index secured a gain of 1.7 percent.
According to the EC, next year the eurozone is forecast to expand by 1.8 per cent.
France's economic expansion is expected to slacken to 1.3 percent this year from 1.5 percent in 2018, after "yellow vest" protests weakened growth over the last months.
"The slowdown is set to be more pronounced than expected last autumn, especially in the euro area", Economy Commissioner Pierre Moscovici said.More news: Nintendo Wants to "Boost the Appeal" of Switch Online Subscriptions
"Uncertainty sapped confidence and output in some Member States was adversely affected by temporary domestic factors, such as disruptions in vehicle products, social tensions and fiscal policy uncertainty", Moscovici said.
Clouds on the horizon are also getting darker, the commission said.
That leaves the eurozone in a bind, especially as strong USA economic performance raises the risk of an abrupt Federal Reserve tightening, particularly next year, that would further curtail cheap financing, the European Union said, the Dow Jones Newswires report added. "The Chinese economy might be slowing more sharply than anticipated while many emerging markets are still vulnerable to sudden changes in global risk sentiment".
For the EU, Brexit remains a source of uncertainty, the commission said. European Central Bank policymakers already walked a fine line in December by downgrading economic forecasts at the same time as ending net asset purchases that have helped buoy eurozone demand.More news: Thomas Cook looking for buyer of its airline
The latest growth forecast may force Italy to again review its spending plans for 2019 in order to satisfy Brussels and assuage investors. The ECB aims to get inflation to just below 2 percent over the medium term.