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European Commission raises eurozone growth forecasts, cuts UK

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The European Commission raises its economic growth forecasts for the euro area for this year and next, while cut its growth estimates for the United Kingdom.

The euro area economy will expand 2.2 percent this year and 2.1 percent in 2018, up from 1.7 percent and 1.8 percent in the spring forecasts. That would be the fastest growth in a decade.

Yet, the Commission predicted the growth pace to ease to 1.9 percent in 2019.

“The European economy has performed significantly better than expected this year, propelled by resilient private consumption, stronger growth around the world, and falling unemployment,” the EC said.

“Investment is also picking up amid favourable financing conditions and considerably brightened economic sentiment as uncertainty has faded.”

Unemployment rate in the 19-nation region will average 9.1 percent in 2017, the lowest rate since 2009, then resume its retreat to 8.5 percent and 7.9 percent in 2018 and 2019, the Commission predicted.

In the U.K., the growth will reach 1.5 percent this year (1.8%), 1.3 percent in 2018 and 1.1 percent in 2019, where it forecast Brexit uncertainty to drag down investments.

As of 10:51 GMT, the euro rose for a second straight session versus the British pound to 0.8865 after opening today at 0.8835.

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