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In its annual investment report, the European Investment Bank said leaders had lost a decade of weak investment and policy focused on short-term crisis management. The fund warned that real Gross Domestic Product growth has slowed down over the last year in line with falling export demand and weakening manufacturing output. Trade dispute and Brexit are contributing to rising uncertainty and deteriorating expectations regarding the economic environment and investment outlook, its report adds.

The EIB has slammed the blocs investment in climate change mitigation, which is lower than that of major economies like the US and China.

Infrastructure investment is also stranded on 1.6 percent of EU GDP, the lowest in 15 years, the fund said.

Its report urges EU leaders to take advantage of historically low interest rates in order to boost public spending.

Andrew McDowell, an EIB vice-president, said: Europe cannot afford to wait out another cyclical downturn. After a lost decade of weak investment, we need to tackle the slowdown now if we are to respond to the historic challenges we are facing.

The EIB, as the EUs financial arm and climate bank, has played a crucial role in kick-starting investment in Europe after the financial crisis and we now stand ready to further support investment for a more sustainable and competitive European economy.

Debora Revoltella, director of the EIBs economic department added: We have to accelerate investment to fully exploit the benefits of the digital revolution, realise our climate goals and rebuild Europes social cohesion.

There is a long list of investments that require public intervention or a private sector that finds the right conditions to overcome uncertainty: firms digitalisation, innovation and business dynamism as well as smart delivery of infrastructure and public services, green innovation and energy efficiency, and e-government, e-learning and e-training.

In a survey of 12,500 EU businesses, the EIB found that most firms are pessimistic about the current political environment.

The number of firms planning to reduce investment has risen for the first time in for years.

Rising uncertainty due to Brexit and further escalation of international trade tensions are beginning to take their toll on investment across the European Union, the report said.

This may be further aggravated by a deteriorating economic, political and regulatory climate, as discussed in the next section.

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EU on the brink: Brexit and trade tensions push bloc's economy towards 'downturn' - Express.co.uk