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Last Updated: Tuesday, 21 February 2006, 13:28 GMT
Europe 'to grow faster in 2006'
German steelworker
The Commission predicts more economic sparkle
Europe-wide economic growth will accelerate this year, the European Commission has forecast.

It predicts that growth across the whole 25 European Union member states will hit 2.2% in 2006, and by 1.9% across the 12 nations with the euro.

The Commission puts the growth down to a number of factors, such as increased private investment, strong corporate profits and favourable financing deals.

Among the EU's main economies, Spain is tipped for the biggest growth, of 3.1%.

Oil price factor

Next in line, the EC says, are the UK (2.4%), France (1.9%), Germany (1.5%) and Italy (1.3%).

But EU Economic and Monetary Affairs Commissioner Joaquin Almunia cautioned that there were some factors that could still throw growth off track, such as higher oil prices.

"Underlying this forecast is the assumption that oil prices will see a small rise in the second half of 2006 ... and that there will be no significant second-round effects of the rise in oil prices on wages," the Commission's interim economic forecast.

It predicts that inflation will be 2.2% this year across both the EU as a whole and the more specific eurozone, based on the assumption that oil prices will rise "moderately", and that the euro's exchange rates will remain steady.

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