Eurozone economy 'broadly stabilised' - Claude Juncker

The eurozone economy has steadied after the plunge of the global economic crisis, the chairman of the euro group of nations, Jean-Claude Juncker, said yesterday.

Mr Juncker, who chairs the group of eurozone finance ministers, said that the economy has "broadly stabilised", suggesting that the worst of the crisis was over.

"The situation has broadly stabilised" and we can express "moderate optimism for the second semester", concerning growth in the eurozone, he told members of the European Parliament in Brussels.

But he warned that the "situation remains fragile and flaky" and that an economic upturn could be very limited in Europe, with a long period of weak growth unlikely to provide nations with much budgetary room for manoeuvre.

Mr Juncker, who is also Prime Minister of Luxembourg, warned that the growth potential of the 16-nation eurozone - that is, the maximum possible growth without sparking excessive inflation - "is going to seriously decelerate".

He said: "We already had growth potential that was quite low before the crisis, in the order of 2.5 per cent (a year), and it seems that the growth potential will hover around 1.5 per cent (a year) between 2010 and 2020," he said.