| 22.1°C Dublin

Sanctions to harm europe's recovery

European Union sanctions on Russia risk hurting the eurozone's economic recovery and accelerating a decline in the value of the currency, foreign-exchange strategists said yesterday.

Deteriorating trade relations with Russia have led Barclays economists to cut their forecast for eurozone gross domestic product, while Royal Bank of Scotland warned the euro will weaken as the sanctions take hold.

Germany will suffer due to its close ties with the Russian economy, according to the Sentix institute.

Russia's continued support for separatists in Ukraine prompted the EU to impose restrictions on some banking and energy companies.

Russia will do less business with the euro area, threatening to slow economic recovery, which the European Central Bank is already striving to jump-start through record-low interest rates.

RBS is keeping its forecast for the money in our pockets to lose more value in the months ahead amid "relatively larger economic blowback from sanctions on Russia."

The euro weakened 1.8pc this year when compared to a basket of world economies while currencies such as the US dollar and sterling rose.

That's bad for people going on holidays outside the eurozone but good Irish companies trying to sell abroad.