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EU Forecasting Tepid Recovery, High Unemployment

Furthermore, despite the recovery, the eurozone's economic output 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.

"It is ridiculous to celebrate GDP growth a¿¿ or non-growth a¿¿ of 0.0 percent as a clear sign of recovery," said Hannes Swoboda, the center-left minority leader in the European Parliament.

He scolded the Commission for favoring "obsessive deficit reduction" that suffocates growth. Instead, he advocated a more balanced approach that would not reduce deficits as quickly, allowing for greater investment and job creation.

Rehn acknowledged "it is too early to declare victory; unemployment remains at unacceptably high levels."

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.

French Finance Minister Pierre Moscovici noted that the Commission's projections, as is usual, are based on the assumption that the government will implement no new reforms.

"But we have made concrete promises to continue to reduce the structural deficit in 2015 with more spending cuts, so I repeat that to go below that, 3 percent, is a credible promise," he told reporters.

Spain, which also secured a deadline extension this year, still seems far off with a projected budget deficit of 6.6 percent in 2015.

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