Eurozone 'will miss out on recovery'

THE International Monetary Fund sharply criticised the eurozone's economic performance on Thursday. Chief economist Kenneth Rogoff warned that continued weakness in Germany, Europe's biggest economy, threatened even a 'tepid' recovery.

'For the moment, most Europeans who want to see an economic recovery will have to watch it on TV,' he said.

The IMF also cut its forecasts for eurozone growth this year from 1.1% to 0.5%.

The fierce criticism came as Chancellor Gordon Brown said the credibility of the EU was at stake 'after a decade of missed opportunity'.

In an article in the Wall Street Journal the Chancellor called for greater competition, lower prices, better consumer choice and higher productivity if the EU's woeful economic performance was to improve. He said the EU had an open market 'in theory - we should make it work in reality'.

For the first time Brown spelled out his opposition to the current direction of European policy.

In remarks that go to the heart of the current row over the new EU constitution, he said: 'As long as Europe clings to the outdated view that the single currency will be followed by tax harmonisation and then a federal state, confidence about future economic growth will remain low.'

The IMF said the slowdown in the 12 euro countries had been 'deeper and more prolonged' than expected.

In contrast, Rogoff said the US was enjoying 'the best recovery money can buy'.

The IMF also cut its growth forecast for Britain this year from 2% to 1.7%, blaming slow investment.