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Eurozone economic growth picking up, EU report says

the euro sign Image copyright Reuters

Eurozone economic growth will be slightly stronger this year than previously forecast, according to the European Commission's latest forecast.

It predicts 1.5% growth this year, up 0.2 percentage points from its forecast in February, thanks to cheaper oil, a weak euro and stimulus measures.

The improvement was despite a much gloomier outlook for Greece, which saw forecast growth cut to 0.5% from 2.5%.

The report said faster growth would see inflation rise and unemployment fall.

For 2016, the Commission kept its forecast of 1.9% for the eurozone.

"The European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit," said Pierre Moscovici, commissioner for economic and financial affairs, taxation and Customs.

"But more needs to be done to ensure this recovery is more than a seasonal phenomenon," he added.

The falling price of crude oil has helped to reduce business costs, while the weak euro helps exporters. And the European Central Bank has injected money into the 19-nation eurozone.

'Uncertainty'

The recovery is being powered by Germany, Europe's biggest economy, which is forecast to see growth of 1.9%, followed by 2% next year. Spain's recovery is predicted to continue, with growth of 2.8% in 2015 and 2.6% the following year.

The sharp cut in the forecast for Greece comes as a new round of debt talks between Greece and its creditors gets under way this week.

"In light of the persistent uncertainty, a downward revision [for Greece] has been unavoidable," Mr Moscovici said.

The EU report predicted that the Greek economy would rebound in 2016 with growth of 2.5% - but only if a deal was reached with its creditors to extend the bailout.

Mr Moscovici is due to meet Greek finance minister Yanis Varoufakis in Brussels later on Tuesday as part of a continuing round of debt talks with the EU and International Monetary Fund.

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