02:31 GMT29 October 2020
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    A private survey showed that economic expansion in the eurozone has slowed to the slowest pace in 18 months, raising concerns over the region’s longer term prospects amid trade tensions, a stronger currency and capacity constraints in most successful regions of the EU.

    According to preliminary data released by Eurostat, the statistical office of the European Commission, the growth rate of the EU's currency area fell to just 0.4 percent in the first quarter of this year, down from surprising 0.7 percent for the last three months of 2017.

    The last time the region's growth was this slow was in the third quarter of 2016, returning the euro area to its post-crisis state of uncertainty over whether it could maintain healthy growth rates for a long period.

    Stephen Brown, European economist at research firm Capital Economics, suggested the disappointing data could be a temporary problem, drawn by factors such as unseasonably cold weather, striking workers, short-term bottlenecks and an outbreak of the flu.

    "But there is no denying that underlying growth has slowed as last year's boost from net trade has faded," the expert said, as cited by the Financial Times.

    While there is no breakdown so far from Eurostat on reasons behind the slowdown, other data suggest poorer exports figures were behind the decline.

    Mario Draghi, European Central Bank president, said last week that the bank would watch the data in the months ahead with "caution", adding, however, that policymakers are not deeply concerned just yet and believe that the region's economy would stay strong enough to support a rise in inflation closer to the ECB's goal of just below 2 percent.

    Meanwhile, the European Commission on Wednesday unveiled its first post-Brexit budget for the period from 2021 to 2027, worth €1.2 trillion and representing 1.11 percent of the EU27's gross national income.

    The UK, one of the EU's biggest net contributors, adds to the existing EU long-term budget, which runs through to 2020. The ensuing budget black hole is likely to be between €12 billion and €14 billion annually.

    READ MORE: Hard Brexit Tory MPs Issue "Non-Threat" to PM as She Prepares Cabinet Showdown

    The budget is expected to spark tensions between net contributors to the EU and net beneficiaries of the EU.

    European Commission chief Jean-Claude Juncker said while the idea of spending more money faces opposition from several states, the proposals were "reasonable and responsible".

    "With today's proposal, we have put forward a pragmatic plan for how to do more with less. The economic wind in our sails gives us some breathing space but does not shelter us from having to make savings in some areas. We will ensure sound financial management through the first ever rule of law mechanism," Juncker said, adding that he believes the budget should be agreed upon before European Parliament elections next year.    


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