Press Release: Economic growth in the European Union continues at a brisk pace

Economic growth in the European Union is set to stay at a brisk pace in 2007 with growth seen at 2.7% in the EU and 2.4% in the euro area in the European Commission's interim forecast. This is +0.3 percentage point above the autumn forecast for both areas. 2006 was a remarkable year, with growth driven by domestic demand thanks to an improved labour market situation (3 million jobs created of which 2 million in the euro area). This allowed the EU economy to weather energy prices that reached record levels in the summer, tighter monetary conditions and a slowdown in the United States. Such developments bode well for 2007. On the inflation front, while higher energy costs pushed up consumer prices to 2.2% last year in both the EU and the euro area, inflation is expected to decline to 1.8% in 2007 in the euro area (2.0% in the EU) on the back of lower oil prices and a relatively limited impact of the German VAT hike.