Barroso says Europe will avoid return to recession

Europe will not slide back into recession, and the euro remains "strong and resilient", the president of the European Commission has said.

Jose Manuel Barroso added that the Commission and national governments were "doing all it takes" to tackle the debt problems in the eurozone area.

His comments came after rating agency Standard & Poor's (S&P) said last week that the risk of a double dip recession in the eurozone had grown.

Yet S&P said that it should be avoided.

'Tighter regulation'

Mr Barroso was speaking during an official visit to Australia.

He said: "We don't anticipate a recession in Europe.

"The latest forecast by the European Commission shows there will be growth, modest growth it is true."

Mr Barroso added: "I want to be very clear here - the European Union and euro are strong and resilient.

"We are doing all it takes, from tackling the underlying budget problems, to strengthening the governance of the eurozone, from tighter financial regulation to improving our overall preparedness."

S&P now expects the economy across the 17 nations that share the euro to expand 1.7% this year, down from its previous forecast of 1.9%.

Weak figures

Data last week showed that manufacturing activity in the eurozone shrank in August for the first time in two years.

The Markit Manufacturing PMI measure for the eurozone fell to 49 from 50.4 in July. A reading below 50 indicates contraction in the sector.

Markit also said that the service sector in the eurozone grew only modestly.

Its service sector PMI measure fell to a 23-month low of 51.5 in August from 51.6 in July.

Official data released in the middle of August showed that eurozone economic growth slowed to 0.2% in April to June, from 0.8% in the first three months of the year.