The euro-area economy will shrink in back-to-back years for thefirst time, driving unemployment higher as governments, consumersand companies curb spending, the European Commission said.

Gross domestic product in the 17-nation region will fall 0.3percent this year, compared with a November prediction of 0.1percent growth, the Brussels-based commission forecast today.Unemployment will climb to 12.2 percent, up from the previousestimate of 11.8 percent and 11.4 percent last year.

Economic and Monetary Affairs Commissioner Olli Rehn saidauthorities must press on with reforms to end the region's debtcrisis and help the recovery. While “hard data” has beendisappointing, there also has been more encouraging “soft data”that points to better times, he told reporters today.