European Commission upgrades eurozone growth forecasts

The European Commission upgraded its forecasts for eurozone economic growth on Wednesday as the transition from recovery to expansion continues.

The EC now expects growth of 2.3% for this year up from a previous forecast of 2.1%, and 2% for 2019, up from a previous estimate of 1.9% on the back of stronger cyclical momentum in Europe, with labour markets continuing to improve, and a better-than-expected pick-up in global economic activity and trade.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: "Europe's economy has entered 2018 in robust health. The euro area is enjoying growth rates not seen since before the financial crisis. Unemployment and deficits continue to fall and investment is at last rising in a meaningful way.

"Economic growth is also more balanced than it was a decade ago - and provided we pursue smart structural reforms and responsible fiscal policies - it can also be more durable.

"This window of opportunity to reform will not remain open forever: the moment to take the necessary ambitious decisions to strengthen the Economic and Monetary Union is now."

The European Commission said core inflation is expected to remain subdued as labour market slack recedes only slowly and wage pressures remain contained. Inflation in the euro bloc was 1.5% in 2017 and is forecast to remain at this level in 2018, rising to 1.6% next year.

The European Union economy as a whole is set to beat expectations, with robust growth of 2.3%, up from a forecast of 1.9% in spring, while preliminary estimates for the last quarter suggest the UK economy grew by 1.8% last year, above the EC's previous forecast for 1.5% growth.