A new report shows the European Union's economy shrinking more than expected, Voice of America reported, quoting statistics released by Eurostat, the EU's statistics office.

Revised figures released on October 7 2009 show the 16-nation eurozone's gross domestic product was down by 0.2 percent in the second quarter as compared to the first three months of the year. A contraction of 0.1 per cent had been predicted.  

The trend was reflected across the 27-nation EU as a whole, where the fall in GDP was 0.3 per cent.

To combat a sliding economy, many EU nations have run up budget deficits exceeding the EU's limit of three per cent of each country's GDP.  

On October 7, the European Commission declared nine countries to be in violation of the deficit limit, including Germany, Italy, and the Netherlands  - as well as Austria, Belgium, the Czech Republic, Portugal, Slovakia and Slovenia.  

The EU designed the rule to keep the finances of EU nations in line and maintain the stability of the European currency. The excessive deficit procedure allows the EC to give deadlines to EU countries to correct their budget deficits to bring them into line with allowed levels.
 
The EC issued a similar warning to another nine countries earlier in 2009, and there are concerns that up to 20 of the 27 members of the bloc could violate the barrier.

The Commission said that the reports adopted on October 7 took due account of the current economic background "and all other relevant factors" and examined whether the deficits planned for 2009 remain close to the reference value and whether the excess is exceptional and temporary.

"The Commission concludes that this is not the case for any of the nine countries."