European Commission sees recovery 'gaining ground'

Production line in the Volkswagen plant in Wolfsburg Germany is the biggest economy in the eurozone

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The European Commission has said economic recovery is "gaining ground" in the EU as it revised up its growth forecasts for 2014 and 2015.

The Commission said the 18-nation eurozone would grow by 1.2% this year and 1.8% next year.

In both cases, the figure was 0.1 percentage points higher than in earlier predictions.

The UK's economy is now expected to grow by 2.5% this year, up from a previous forecast of 2.2%.

However, the Commission left its UK growth forecast for 2015 unchanged at 2.4%.

Analysis

The forecast does not exactly paint a picture of new sun-lit uplands for Europe, but it does reflect the gradual improvement taking place in the eurozone.

And it really is gradual. Growth this year of 1.1% is certainly an improvement on last year's decline, but it is still anaemic and not enough to make much of an impact on the eurozone's serious unemployment problem.

Two national economies are predicted to continue declining this year - Slovenia and Cyprus.

A few countries have had their growth forecast downgraded.

Italy is one of them - another indicator, if it were needed, of the challenge facing the new Prime Minister Matteo Renzi.

More encouraging was a relatively large uplift in the 2014 forecast for Spain.

But the Commission also acknowledges that risks remain, notably the danger that reform efforts might stall.

So the clouds are still there, but not as dark as they were.

The wider 28-nation EU's prospects have been revised up by 0.1 percentage points, to 1.5% in 2014 and 2% in 2015.

The last time the Commission issued its forecasts was in November last year.

"Recovery is gaining ground," said Olli Rehn, commissioner for economic and monetary affairs. "The worst of the crisis may now be behind us."

However, he also warned that the recovery was "still modest".

"To make the recovery stronger and create more jobs, we need to stay the course of economic reform," he added.

The Commission's forecasts highlight the disparity between the performances of different countries within the EU.

It now expects the Netherlands to grow 1% this year, up from its last forecast of just 0.2%.

However, it downgraded its forecasts for Cyprus and Slovenia.

The Commission's upgrades follow a similar upward revision by the International Monetary Fund.

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