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The Commission forecast that Germany's economy will grow 0.5 percent this year, but France, Europe's second-largest economy, will record only 0.1 percent growth. Italy and Spain are expected to decline 1 percent and 1.4 percent respectively. Meager growth, in turn, means that some governments might have to tighten their belts even further
-- possibly in France, where the government's 2013 budget is predicated on a growth rate of 0.8 percent. Given its paltry level of growth, the Commission said France was likely to miss its target of getting its budget deficit down to below 3 percent of its annual gross domestic product. Instead, it predicted that the deficit will actually rise from 3.7 percent of GDP this year to 3.9 percent next. And it forecast that the country's overall debt burden will rise from 90 percent of GDP last year to 95 percent in 2014. Rehn urged the French government to push ahead with measures to reduce its deficit and implement reforms to the labor market and to pensions. "France faces significant challenges," he said. Tom Rogers, senior economic adviser at Ernst & Young, said he was encouraged with the Commission's message on the need for countries to continue with their ongoing policy efforts. "Reforms are already bearing fruit in a number of peripheral economies, and this should be an incentive for other governments to follow suit," said Rogers. Greece has been the country that has pursued the most difficult reforms and austerity over the past few years and the Commission forecasts for the country show it's still a long way from healing. The country, according to the Commission, will contract a further 4.4 percent this year
-- Greece's sixth year in recession -- before posting growth of 0.6 percent in 2014. One bright spot is that the Commission expects Greece to achieve a primary budget surplus
-- whereby revenues are higher than spending excluding interest payments -- sometime this year. However, given the depth of its recession, Greece's debt burden will continue to rise from 162 percent of annual GDP in 2012 to 175 percent this year and next.
[Associated
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