Brussels - Warning of tough times ahead, the European Commission on Wednesday cut the EU's 2008 growth estimates for a second time in seven months - this time to 1.4 per cent.

The EU's executive arm had previously forecast a Gross Domestic Product (GDP) growth rate for the 27-member bloc of 2.0 per cent. The commission's February interim estimate had in turn been revised down by about half a percentage point from its November forecast.

GDP for the 15-member eurozone was similarly revised down, from 1.7 per cent to 1.3 per cent, in line with analysts' expectations.

Europe's economic slowdown was being blamed on a combination of factors, most notably a deepening of the global financial turmoil, house market collapses and soaring commodity prices.

The commission now expects inflation to average 3.8 per cent in the 27-member EU and 3.6 per cent in the eurozone this year.

"The continuation of the turmoil in the financial markets one year on, the near doubling of energy prices over the same period and the correction in some housing markets have had an impact on the economy," said Economic and Monetary Affairs Commissioner Joaquin Almunia.

In a statement accompanying Wednesday's interim forecasts, the commission said plummeting business and consumer confidence, as well as falling industrial production and retail sales in Europe, suggest "a bleak outlook" for the EU economies.

After rising in the first quarter and dropping in the second, European GDP was now expected to stagnate during the second half of the year.

The GDP estimate for Germany, Europe's economic locomotive, was maintained at 1.8 per cent, while Italy confirmed its reputation as "the sick man of Europe" after its economic growth for 2008 was slashed from 0.5 to just 0.1 per cent. (dpa)