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EU hails growth but warns of uncertainty in UK over Brexit

11 May 2017

The 19-country eurozone will grow by 1.7 percent in 2017 followed by 1.8 percent in 2018, the Commission said in its spring economic forecasts.

"The continuation of solid growth in private consumption, together with a recovery in investment, is forecast to lead to faster economic growth in 2017 and 2018", the commission said.

The projected growth for 2017, however, remains lower than 2016 when it was 1.8 percent, and further below the 2.0 percent post-crisis high reached in 2015.

The euro zone, meanwhile, is expected to grow by 1.7 per cent this year, an increase of 0.1 percentage points compared to the previous estimate.

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Inflation is forecast to slow to 1.3 percent next year from a downwardly revised 1.6 percent this year, the Commission said, predicting a lower inflation than European Central Bank's estimates of a 1.7 percent rate this year.

Economy Commissioner Pierre Moscovici welcomed the fact that Europe is entering its fifth year of growth and "that the high uncertainty that has characterized the past 12 months may be starting to ease".

But while some of the risks to the European economy are ebbing, geopolitical developments and a host of "elevated" uncertainties still pose threats, the EU's executive arm-the European Commission-said. The risk and the economic prospects facing Bulgaria are, overall, balanced.

The news was especially positive for non-euro Britain which would continue growing healthily despite the unknowns of Brexit, the Commission said. Structural deficit projection has also improved.

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The global economy gathered momentum late last year and early this year as growth in many advanced and emerging economies picked up simultaneously.

The EC is still expecting that Bulgaria's GDP will mark a 2.9% increase in 2017 and that it will slow down slightly in 2018 - to 2.8%.

The thrice-yearly review comes on the heels of Emmanuel Macron's presidential victory in France on a business friendly and pro-EU platform and as centrist politicians across Europe appear to be beating back a populist backlash against the bloc, amid tepid economic growth.

Both the general government deficit-to-GDP ratio and the gross debt-to-GDP ratio are expected to fall in 2017 and 2018, in both the euro area and the EU.

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EU hails growth but warns of uncertainty in UK over Brexit