Press Release: Spring economic forecast 2007-2008: unemployment and public accounts to improve further as growth stays solid

The European Union economy is expected to grow by 2.9% in 2007 and 2.7% in 2008 (2.6% and 2.5%, respectively, in the euro area) on the back of solid investment and stronger private consumption, according to the Commission’s spring economic forecasts. Such growth levels imply an upward revision of 0.5% in 2007 for both areas compared to the autumn. The EU as a whole is predicted to create almost 9 million new jobs over the period 2006-2008, 6 million of which for the euro area alone. This will help to reduce EU unemployment to less than 7% in 2008 from 8.75% in 2005. The economic recovery will continue to improve public finances, with the general government deficit forecast to fall to around 1% in both the EU and the euro area - a level not seen in many years. Inflation is expected to remain contained, although the outlook is for a slight pick-up of underlying inflation over the forecast horizon, mirroring the renewed increase in oil prices and the cyclical recovery.