Growth in the 25-nation European Union will be 0.2 percentage points lower than forecast by the European Commission in April if oil prices remain at current levels, an official was quoted as saying today.
"The current price is a risk for European growth," European Economic Affairs Commissioner Joaquin Almunia told Germany's Die Weltnewspaper.
But Mr Almunia said he was not concerned with the decline in the euro's exchange rate against the dollar to below $1.20, which is helping to push up the cost of oil imported into the bloc.
"This value is the average level of the past years," he said. The European Commission forecast in April that the 25-nation EU would grow 2.0 per cent in 2005 and that the 12-nation euro zone would grow 1.6 per cent.
Mr Almunia said weak growth was one reason Germany was likely to fail to cut its 2005 budget deficit below the EU's 3 per cent of gross domestic product (GDP) limit.
Mr Almunia also reiterated the EU executive would review Germany's situation in the autumn and would apply the bloc's reformed EU Stability and Growth Pact.
Euro zone finance ministers are due to hold their regular monthly meeting later on Monday at which they will review the outlook for the region's economy. All 25 EU finance ministers are due to meet tomorrow.