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Photograph: freeimages.com/robert_driese

The European Commission lowered its expectations for growth in the eurozone on Tuesday, citing uncertainty over Britain's EU referendum as a risk factor, while economic heavyweights France and Spain are struggling to get their deficits in line.

The euro currency bloc has had trouble revving up its economic engine ever since emerging from recession in 2013. It has had to contend with high unemployment, low inflation and, more recently, a migration crisis that is straining the bloc's cash-strapped governments.

The eurozone is expected to expand by 1.6 per cent this year and 1.8 per cent in 2017, the commission said in its spring economic forecast, slightly revising down earlier predictions.

Britain's in-out referendum on EU membership in June, as well as concerns over a Chinese economic slowdown and geopolitical tensions are all creating "substantial uncertainty," the commission warned.

"The economic recovery in Europe continues but the global context is less conducive than it was," commission Vice President Valdis Dombrovskis said in a statement.

Despite a eurozone monetary policy that is favourable to investment, the commission warned that a recent rise in the value of the currency and rebounding oil prices could put a damper on the bloc's economy.

"Future growth will increasingly depend on the opportunities we create for ourselves," Dombrovskis said, calling on member states to step up efforts to reform their economies and whittle down public and private debt.

Spain, in particular, appears on track to miss its economic goals. Its deficit is expected to hit 3.9 per cent of gross domestic product (GDP) this year and 3.1 per cent in 2017, despite being told to meet the EU-recommended deficit ceiling of 3 per cent by 2016.

The country has been in a political limbo since inconclusive elections in December, with a new round of polls now set for June.

France will also have to undertake further efforts to meet EU budget targets, Tuesday's projection shows, with its deficit expected to stand at 3.4 per cent this year and 3.2 per cent in 2017.

The country has been in breach of deficit limits since 2009, and now has until 2017 to get its budget shortfall in line with EU rules, after having been granted three deadline extensions.

Meanwhile, Portugal showed a positive development after being warned earlier this year to bring its budget in line with the bloc's fiscal rules. The country now looks set to deliver a deficit of 2.7 per cent this year and 2.3 per cent in 2017.

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