Europe’s outlook for economic growth and inflation deteriorated sharply on Monday as official forecasts showed the US downturn and the turmoil in world financial markets damping prospects.

In its latest six-monthly forecast, the European Commission said economic growth in the 27-nation European Union would slow to 1.8 per cent in 2009 from 2.0 per cent this year. Growth in the 15-nation eurozone would fall to 1.5 per cent from 1.7 per cent.