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EU economy expected to shrink in 2013

Despite earlier predictions, the European Union's economy is expected to shrink in 2013.

2012 02 20 euro symbolEnlarge
As the euro zone crisis grinds on, an increasing number of European banks and countries are facing ratings hits. (Ralph Orlowski/Getty Images)

Despite earlier reports that the European Union's economy would grow slightly in the coming months, the European Commision has said that the recession will persist and that the EU's economy will in fact shrink.

According to the Financial Times, France's gross domestic product is expected to grow just 0.1 percent, and Germany's GDP will only increase by 0.5 percent. The EU's economy will shrink 0.3 percent as a whole.

This is bad news for the countries that have already requested financial assistance from the EU — Greece, Spain and Portugal will all likely suffer even deeper recessions this year.

The BBC reportedthat the austerity measures that were implemented by many eurozone governments are being widely blamed as a major contributor to the EU's bleak economic future.

However, there's still no consensus over whether governments should reduce their spending cuts.