German Chancellor Angela Merkel rejected suggestions on Friday that the worst was over for the euro zone, saying the currency bloc faced years of painful reforms, slow growth and high unemployment.
Speaking to reporters at the end of a two-day summit of EU leaders in Brussels, Merkel hailed agreements on banking supervision and the release of aid to Greece, but was cautious about predicting better times ahead.
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"One reason I am careful with my forecasts is the adjustment process, the changes that we are going through are very difficult and painful," Merkel said.
She said the bloc would not see the fruits of labour market and other structural reforms for several years, with 2013 shaping up as another challenge.
"Next year, and the ECB president said this, we will have very low growth rates, we will see negative growth in some countries, and we can expect very high unemployment levels to continue," Merkel said.
"On the one hand we have accomplished a lot. But we also have tough times ahead of us that can't be solved with one big step. There has been lots of talk about the one step, whether it be a debt haircut, euro bonds or some other measure that will solve everything. That won't be the case." (Reporting by Noah Barkin)