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EU Forecasting Tepid Recovery, High Unemployment

By JUERGEN BAETZ

BRUSSELS (AP) a¿¿ Europe's economy will continue to recover through next year, but at a subdued pace that will leave unemployment near record highs, the European Commission said Tuesday.

The Commission, the EU's executive arm, said 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.

"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.

Growth, however, is likely to remain too weak to generate many new jobs.

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 a drop of 0.1 percent in 2013.

The 17-country eurozone is forecast to continue its recovery from 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.

Rehn said governments' deficit reductions and reforms "have created the basis for recovery." But the forecasts show that will do little to alleviate the plight of the jobless.

Unemployment in the eurozone is expected to remain at its record high of 12.2 percent this and next year, dropping only modestly to 11.8 percent in 2015.

In the wider, 28-country EU, which includes members like Britain and Poland who don't use the euro currency, unemployment is expected to dip from 11.1 percent in 2013 to 11 percent next year.

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