The eurozone could slide into recession next year, the European Commission warned on Thursday amid faltering European economic growth and worsening debt problems.
"Growth has stalled in Europe, and there is a risk of a new recession," European Commissioner for Economic and Monetary Affairs Olli Rehn said.
The eurozone will grow by only 0.5 percent in 2012 according to a new forecast published by the European Commission, or 1.3 percent less than the previous predictions made in spring, he said.
“This forecast is in fact the last wake-up call,” he warned.
The revised forecast comes as the eurozone debt crisis has spread alarmingly to Italy, the eurozone's third largest economy.On Wednesday the yield on Italy’s benchmark 10-year sovereign bonds rose to above the 7 percent level that triggered bailout requests from Portugal, Ireland and Greece.
At that level, debt repayment is likely to exceed the level at which Italy can afford to repay it. Italy's state debt stands at about 1.9 trillion euros ($2.6 trillion). Many analysts suspect that Italy's debt problem is simply too big to bail out.
