EU economies will contract by 4% in 2009, the European Commission has forecast - more than twice what it predicted at the start of the year.
It said the worsening of the global financial crisis, dropping levels of world trade and continuing house value falls had prompted the huge downgrade.
The commission added Europe's economy would not start recovering until the second half of next year.
It also predicted unemployment in the EU would reach 10.9% in 2010 and the jobless figure would be 11.5% across the 16 countries using the euro, known as the eurozone.
Economic and Monetary Affairs Commissioner, Joaquin Almunia said the European economy "is in the midst of its deepest and most widespread recession in the post-war era."
But he said "ambitious measures" taken by governments and central banks were expected "to put a floor under the fall in economic activity this year and enable a recovery next year."
In January, the commission had predicted the eurozone would shrink by 1.9% in 2009 and grow by 0.4% in 2010.
As well as the downward revision for this year, it now expects the eurozone economy to shrink by 0.1% next year.
The BBC reports the commission expects inflation to fall well below the European Central Bank's target of 2%.
It projects inflation to slow to 0.4% this year from 3.3% in 2008, and to rise to only 1.2% in 2010.
The European Central Bank has forecast a 3.8% contraction in its latest estimate.
The 16 eurozone countries are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain
The European Union is made up of those countries in the eurozone plus: Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Sweden and the UK.
