UK growth will not slow as much as feared, European Commission says

The UK's growth prospects for 2017 have been upgraded by the European Commission, which also improved its forecasts for the eurozone.

The EC upped its estimate for UK gross domestic product growth to 1.5% from a previous forecast of 1.0%, following the increased forecasts from the Bank of England earlier this month.

The Commission's forecast still represents some slowdown from the 2.0% growth recorded in 2016 as consumer spending weakens and it sees inflation picking up to 2.5% from the 0.7% last year.

Forecasts for economic growth in the eurozone area were revised higher to 1.6% from the previous 1.5%, with the 2018 forecast upped to 1.8% from 1.7% before.

Eurozone inflation is expected to climb to 1.7% in 2017, bumped up from a prior forecast of 1.4%, with the consumer price index forecast for 2018 maintained at 1.4%.

Unemployment in the euro area was forecast to fall to 9.6% in 2017, revised down from the previous 10%, with the 2018 number put at 9.1%.

"The impact of the vote by the U.K. to leave the EU in the referendum held on 23 June 2016 on growth has yet to be felt," the commission said in its report on Monday, saying it expected recent momentum to "ease notably" after the first quarter.

The Bank of England also upped its forecasts this month significantly to 2% from the 1.4% predicted in November and revised down its inflation forecasts for two years ahead.

For 2018 and 2019, the economy is expected to grow by 1.6% and 1.7% respectively, up from the 1.5% and 1.6% seen in November.