Europe was caught out by the financial crisis and did not see recession looming, the head of the Eurogroup of nations conceded today, amid estimates that the EU has plunged into a downturn.
'Recession awaits us, and we didn't think that recession lay in waiting,' euro zone chairman Jean-Claude Juncker told members of the European Parliament in Brussels.
'We were badly mistaken with the different sequences of this crisis,' said Juncker, who is also the premier and finance minister of Luxembourg.
'The headwinds we were facing turned into a veritable storm,' he said, in reference to the way the crisis burgeoned in the US before spreading worldwide. But he warned that 'now is not the moment to sit on our hands'.
Juncker urged nations that are able to take 'targetted measures so as not to slip toward a prolonged recession', adding that Europe's response to the crisis should not simply consist of calling for the euro zone's fiscal rulebook to be adhered to.
The European Commission yesterday warned that the worst financial crisis for generations has driven the EU economy into recession and that economic growth would come close to a standstill next year.
It forecast that the 15 countries sharing the euro have slumped into the first technical recession - defined by economists as two or more quarters running of economic contraction - since the bloc was formed in 1999.
In a broad downgrade of past estimates, the commission forecast a short, shallow recession for the EU, predicting the bloc's combined economy would shrink by 0.1% in both the third and fourth quarters of 2008.
For the whole of 2008, the EU's executive arm forecast that the 27-nation economy would grow 1.4% and only 0.2% next year.
