Against such a depressing background, Rehn chided France for the "persistent deterioration of French competitiveness" and called for "substantial structural reforms in the labor market."
Instead of moving toward a safe 3 percent deficit, France is forecast to have a deficit of 3.9 percent this year and 4.2 percent next year. The French government said that new legislation is already in the pipeline to cut spending and increase the fight against fiscal fraud to bring its deficit down.
In a move designed to help the eurozone's economic recovery, the European Central Bank on Thursday cut its benchmark interest rate a quarter-point to a record low of 0.50 percent. Bank President Mario Draghi added that the ECB was prepared to flex its muscles further, saying the ECB stood "ready to act if needed." But Draghi also implored Europe's governments to do more to stimulate economic growth.
Unemployment across the eurozone is expected to hit an average of 12.2 percent this year, up from 11.4 percent in 2012. In both Greece and Spain it is expected to peak at 27 percent.Rehn said that "in view of the protracted recession, we must do whatever it takes to overcome the unemployment crisis." There are currently 19.2 million people out of work in the eurozone, leaving EU leaders with an uphill battle to turn the economy around while making sure the population continues to back the austerity measures aimed at whipping public finances back in shape. Rehn insisted that after the 2012 recession, GDP growth is expected to start picking up again in the second half of 2013. He added that, under the assumption of unchanged policies, GDP would even rise by 1.2 percent in 2014. But overall, the news remained bleak as the report said that "the recovery of economic activity is expected to be too slow to reduce joblessness."