The European Union said that it is facing a deep and protracted recession and slashed growth forecasts, while Britain announced its second massive bank bailout in just over three months in another wave of bad economic news in Europe.

European Commission said that the economy in the 16 nations that use the euro will shrink by 1.9% in 2009, with the entire EU contracting 1.8%, drastically cutting earlier forecasts of 0.1% for the euro zone and 0.2% for the EU. It added that 3.5 million jobs will disappear in the EU in 2009 as business and household spending falls and banks tighten lending.

It may be noted that the EU executive raised warning flags about credit conditions, saying that European states may need to inject more than the EUR 300 billion they have already put into banks to avoid a sustained drag on bank lending.

(Sourced from www.star-telegram.com)