Yves Logghe, AP
BRUSSELS — Europe's economic recovery will continue into the second half of the year, though at a subdued pace, while unemployment will remain near record highs through next year, the European Commission said Tuesday.
The European Union's economy is expected to grow 0.5 percent over the second half of the year, leaving it flat for the whole year, and expand 1.4 percent in 2014, according to the Commission's fall forecast. Its last predictions, issued in May, had expected an economic decline of 0.1 percent in 2013.
The Commission, the EU's executive arm, also expects the 17-country eurozone to continue its recovery from a protracted recession, from which it emerged in the second quarter. However, over 2013 as a whole, the eurozone is still expected to record a decline of 0.4 percent. For next year, the Commission is penciling in 1.1 percent growth, downward marginally from its previous forecast of 1.2 percent.
"There are increasing signs that the European economy has reached a turning point," said the EU's Commissioner for Economic and Monetary Affairs, Olli Rehn.
Rising business confidence and strengthening domestic demand are expected to underpin the recovery as governments also slow the pace of austerity measures such as spending cuts and tax increases.
"The fiscal consolidation and structural reforms undertaken in Europe have created the basis for recovery," Rehn added.
The eurozone's output, however, remains about 3 percent below the level recorded in 2008, when the global financial crisis was entering its most acute phase and Europe's debt crisis hadn't yet started, the report said.
The eurozone's projected growth will also fail to create many jobs, leaving the unemployment rate at its record high of 12.2 percent this and next year, dropping to 11.8 percent only in 2015, according to the forecast.
Rehn acknowledged "it is too early to declare victory; unemployment remains at unacceptably high levels."
The unemployment rate for the wider, 28-country EU, which includes members like Britain and Poland who don't use the euro currency, is expected to dip from 11.1 percent in 2013 to 11 percent next year.
The Commission expects Spain and Greece to return to tepid growth next year after seeing a contraction this year. But unemployment is forecast to stay above 26 percent in Spain through the end of next year, and to drop only slightly in Greece, from around 27 percent now to 26 percent.
The forecast for France, the bloc's second-largest economy, suggested President Francois Hollande's government might have to pass more austerity measures to meet the EU budget deficit target. The EU has given France two more years to bring its budget deficit below 3 percent of GDP, but the new forecast puts it as 3.7 percent in 2015.
Spain, which also secured a deadline extension this year, still seems far off with a projected budget deficit of 6.6 percent in 2015.
Using new powers given to the European Commission to avoid a repeat of the debt crisis, Brussels is currently assessing the eurozone nations' draft 2014 budgets. It will present its findings next week and can ask member states to amend their budgets to meet agreed targets.
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