Growth in the euro area is at a complete standstill and there is a high risk the EU will fall back into a recession in the coming months, the European Commission warned this morning

Addressing a press conference in Brussels to launch the autumn economic forecasts, Economic and Monetary Affairs Commissioner Olli Rehn said that the Commission has revised downwards its GDP forecasts for next year, as the European economy is at a complete standstill and the current uncertainty, particularly related to the sovereign debt crisis, is expected to continue to reduce confidence in the economy.

"Unfortunately I have no good news," he told a packed press room at the Commission's headquarters.

"Growth has stalled in Europe, and there is a risk of a new recession. While jobs are increasing in some member states, no real improvement is forecast in the unemployment situation in the EU as a whole. The key for the resumption of growth and job creation is restoring confidence in fiscal sustainability and in the financial system and speeding up reforms to enhance Europe's growth potential. There is a broad consensus on the necessary policy action. What we need now is unwavering implementation. On my part, I will start using the new rules of economic governance from Day one."

According to the forecasts, GDP growth in the Eurozone this year will reach an average of 1.5 per cent and is expected to fall to just 0.5 per cent next year.

Malta will also be feeling the pinch and its economic growth is also predicted to slow down.

According to Brussels, while Malta is expected to register a GDP growth of 2.1 per cent this year, the economy will slow to just 1.3 per cent in 2012.