EU raises its growth forecast for 2014

The European Commission has raised its growth forecast for the EU, saying that "the recovery has taken hold".

The 26 nations of the EU are forecast to grow by 1.6% for 2014, a touch higher than the forecast of 1.5% made in late February.

The growth forecast for the 18-nation eurozone remains at 1.2% for 2014.

The Commission expects the jobs market to continue to improve, forecasting EU unemployment will fall to 10.1% this year. In March, the rate was 10.5%.

Unemployment in the euro-area is expected to fall to 11.4%, from 11.8% in March.

Siim Kallas, the Commission's vice-president, said: "The recovery has now taken hold. Deficits have declined, investment is rebounding and, importantly, the employment situation has started improving.

"Continued reform efforts by member states and the EU itself are paying off."

Europe's biggest economy, Germany, is expected to grow 1.8% this year.

But 2014 growth is forecast to be much more modest for the euro-area's other big economies:

• Italy: 0.6%
• Spain: 1.1%
• France: 1.0%

There is concern over weak inflation in Europe

Inflation is expected to remain low in 2014, at 0.8% for the euro-area. That is lower than its previous forecast of 1.0% made in February.

There is concern that Europe could slip into a period of deflation, which is dangerous, as it discourages investment by firms and spending by consumers.

"While current price developments reflect both external factors and the ongoing adjustment process, a too prolonged period of low inflation could also entail risks," the Commission said.

"However, the gradually strengthening and increasingly broad-based recovery should mitigate these risks," it added.