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Brussels cuts eurozone inflation forecast but holds firm on growth

Brussels cuts eurozone inflation forecast but holds firm on growth
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The European Commission (EC) is predicting that price growth across the eurozone will pick up more slowly than expected this year and next, with low inflation rates continuing to put a damper on economic expansion.

The EC’s inflation forecast for 2014 has been reduced from 1 percent to 0.8 percent and trimmed to 1.2 percent for 2015 – both well below the European Central Bank’s (ECB) target of just under 2 percent.

Despite that, Brussels has held firm on its overall economic growth forecast of 1.2 percent for this year and reiterated that the eurozone recovery has “taken hold”.

EC Vice-President Siim Kallas told reporters: “Since the EU economy came out of recession a year ago, the economic outlook remains favourable. The recovery is gaining traction, including in vulnerable countries .The policies implemented in recent years are bearing fruit. Investment is rebounding while unemployment remains high in many member states.”

European longterm joblessness is at record levels. The worst-affected countries, Spain and Greece, have unemployment rates of more than 25 percent.