The European Commission said yesterday it would probably cut its economic growth forecast for the European Union of 1.8 per cent for this year due to new risks.

Commission spokesman Mr Gerassimos Thomas said that "certain downside risks have materialised" since the Commission issued its economic forecasts in November.

Speaking ahead of a meeting of euro-zone finance ministers last night, Mr Thomas said those forecasts still were current because there was insufficient information to change them. But the Commission was waiting for "the right moment to give you a new indication of growth", he said.

Mr Thomas said he did not expect the EU's Economic and Monetary Affairs Commissioner, Mr Pedro Solbes, to present revised forecasts at the meeting of the 12 euro-zone ministers.

The euro group meeting, to be held in parallel with the EU emergency summit on Iraq, is expected to be dominated by a discussion of the economic impact of a war.

Mr Thomas said the agenda of the euro-group meeting would include a review of the commission's paper on strengthening budgetary policy coordination as well as review economic developments since last month's meeting.

News of an impending cut in the EU's growth forecast for 2003 came as Germany, the euro zone's biggest economy, appeared to be sliding back into recession.

The Bundesbank yesterday said it had estimated the German economy had contracted slightly in the fourth quarter.

According to its preliminary calculations, gross domestic product was slightly lower in the fourth quarter of 2002 than in the previous three months.

On a 12-month basis, GDP was estimated to have grown by around 0.5 per cent in Q4, a similar rate to the third quarter.

The Bundesbank said its estimates were "in line with the preliminary GDP data published by the Federal Statistics Office last month according to which the German economy grew by just 0.2 per cent in the whole of last year."

"The economy has been in a phase of quasi-stagnation for more than two years," the Bundesbank said. It said this was partly due to the worldwide slump, given Germany's very high dependence on exports.