The economic system of Europe will contract this year while two more euro zone nations will feel the pinch of the sovereign debt crisis, a leader of the European Commission told reporters on Thursday.
Within the same week that a second tranche of bailout aid was approved for Greece, the economics commissioner for the European Union said pressure will mount upon Spain and Italy as the nations work on staving off threats inflicted by the debt scourge, Bloomberg reports. Rather than fulfill the 0.5 percent growth projected this past November, the economy of the euro zone will contract 0.3 percent.
"Member states facing close market scrutiny should be ready to meet budgetary targets" and prepare themselves for increased fiscal consolidation, Olli Rehn told reporters on Thursday following release of the latest EU forecasts, according to Dow Jones Newswires. "It is essential Europe continues to take decisive action."
The economies of Spain and Italy are projected to contract 1 and 1.3 percent, respectively, and investors and analysts have been closely monitoring the nations to see how they fare in the face of the ravaging debt crisis.
Both nations have seen their bonds flirt with yields of higher than 7 percent, which is the same figure that prompted Greece, Portugal and Ireland to seek bailout aid.
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