European Union registers 'highest economic growth rate in 10 years'

The report suggests a deal could be completed by November 2018

"The euro area economy is on track to grow at its fastest pace in a decade this year, with real GDP growth forecast at 2.2%". In May the Commission forecast 2017 growth at 1.7 percent. The Commission forecast that growth in Britain in 2019 - the country is due to leave the bloc in March of that year - would only be 1.1 percent but stressed that its forecast was just a "technical assumption of status quo" in terms of the future trading relationship between the country and the rest of the EU.

Only Italy's economy was in a similarly sluggish state to Britain's, with a forecast of 1.5% GDP growth this year, 1.3% in 2018 and 1% in 2019.

Yet the European Union warned that job creation is poised to slow as governments' stimulus measures wind down and "untypically low" wage growth continued to weigh on economic performance.

"The external sector is expected to remain solid, supported by an improved external environment, especially in the euro area", the Commission said in its section on Luxembourg.

European Economic Commissioner Pierre Moscovici told a Brussels press conference: "After five years of moderate recovery, European growth has now accelerated". The pick-up in growth has been mostly driven by private consumption, spurred by tax cuts, significant hikes in both public and private wages, and low rates of inflation. The economy would slow even further to 1.3 percent in 2018, followed by 1.1 percent in 2019.

The outlook was positive for Spain despite the crisis over Catalonia, with its growth foreacast upgraded to a robust 3.1 percent for this year, leading the eurozone's major economies.

From 2018, the European Commission will revert to publishing two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year, instead of the three comprehensive forecasts in winter, spring and autumn that it has produced each year since 2012. Romania's 2017 budget is built on projections for 6.1% economic growth and deficit equivalent to 2.96% of GDP.

In spite of increases in social spending related to the budget measures (among which is an increase in pensions by €2 per week), current expenditure growth is projected to weaken and interest expenditure is set to marginally decrease.

The EU predicted these reforms would benefit the economy, with French growth to hit 1.6 percent this year, up from the earlier 1.4 percent. Employment is projected to increase by 0.7% in 2017.

The Commission noted the the prospect of Brexit "is already having an impact on economic activity" and insisted that its forecasts for 2019 where based "on a purely technical assumption of status quo in terms of trading relations between the EU-27 and the United Kingdom".

This, the Commission said, is for "forecasting purposes only and has no bearing on the talks underway" in the context of the Brexit talks, which resumed Thursday.



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