Eurozone 'facing recession right through 2013'

The eurozone faces another full year of recession in 2013 with unemployment likely to surge above the 20-million mark and French and Spanish state spending badly overshooting targets, the EU said on Friday.

Economic output across the 17-state currency area is set to shrink by 0.3 percent this year after a 0.6-percent contraction last year, the European Commission said.

That means that millions more people are likely to lose their jobs, with already record unemployment expected to rise markedly right into 2014.

The EU's winter economic forecast said there would not be a return to growth for the debt-laden monetary union -- home to about 340 million people -- until 2014, when growth would return at a rate of 1.4-percent from this low base.

As a result, the unemployment rate would hit 12.2 percent for 2013 after 11.4 percent last year -- which left the number of people unemployed already at nearly 19 million.

Much of the attention was on France where the public deficit is set to be worse than previously expected in 2013 and 2014, veering up to 3.7 percent of output this year and 3.9 percent next year.

France, with the eurozone's second-biggest economy, was due this year to get back within the European Union's deficit ceiling of 3.0 percent of output, and had been expected to show a deficit of 3.5 percent of gross domestic product.

The gap leaves Socialist President Francois Hollande looking for special leeway from Brussels.

Spain's public deficit meanwhile exploded to 10.2 percent of output in 2012, the Commission said two days after Prime Minister Mariano Rajoy said it had fallen below 7.0 percent of GDP.

The figure for 2014 in the EU's latest economic forecasts would be 7.2 percent, Brussels also said -- although these figures may pre-date those of Rajoy, who said Madrid had avoided an economic "shipwreck" last year.

"We must stay the course of reform and avoid any loss of momentum," EU Economy and Euro commissioner Olli Rehn told a press conference, arguing that the drag on growth and uptick on joblessness was a natural consequence of "the ongoing rebalancing of the European economy."

Across the full, 27-state EU, which also includes Britain and Poland, growth is expected to be 0.1 percent this year and 1.6 percent next year, with the non-eurozone part doing better on unemployment too.