European Union cuts United Kingdom growth forecast as eurozone motors ahead

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However, citing slowing employment growth, lower increases in real disposable incomes and moderating investment growth, the commission said Eurozone growth would moderate slightly over the forecast horizon, to 2.1 percent in 2018.

The Commission also raised its growth forecast for next year to 2.1 percent from 1.8 percent.

Regarding potential risks for Bulgaria's economy, the EC said that "a slower utilisation of European Union funds could moderate the contribution of investment to growth", while increased tax revenues could create pressure for "additional wage increases, as well as for public investment fully outside the European Union funds programmes". Under a no-policy-change assumption, the euro area general government deficit-to-GDP ratio is expected to fall to 0.8% in 2019 (1.1% in 2017 and 0.9% in 2018), while the debt-to-GDP ratio is forecast to decline to 85.2% (89.3% in 2017 and 87.2% in 2018). The bloc also cut its United Kingdom 2017 economic growth forecast to 1.5% from 1.8% while keeping it steady at 1.3% for next year. It is gloomier about the outlook than the Bank of England, which expects growth of 1.7% in both years.

Revenue growth is supported by the favourable macroeconomic and labour market conditions, high corporate profits, consumer demand and the proceeds from Malta's citizenship scheme.

The increase follows the International Monetary Fund upping Turkey's 2017 growth forecast 2.6 percentage points on October 10, the World Bank raising its forecast 0.4 percentage points on October 19 and the European Bank for Reconstruction and Development's [EBRD] lifting it by 2.6 percentage points on November 7.

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The government deficit is moving closer to balance but risks to the fiscal outlook remain, it said. Our policies need to remain firmly focused on making growth sustainable and inclusive.

Moscovici, the French member of the Commission, said the decision over closing the procedure will be taken in spring 2018.

In its report, the European Commission points out that growth in the first half of this year remained "surprisingly strong", and that the impact of the restructuring process in Agrokor, the largest private employer, was smaller than expected. The European Commission said in its autumn economic forecasts on Thursday that it sees Italy's debt falling only marginally.

The unemployment rate in Croatia will this year be 11.1 percent, falling to 9.2 in 2018, and 7.5 percent in 2019, which should be somewhere near European Union average.

The current account surplus is forecast to be close to 10% of GDP for 2017, pushed by strong growth in exports, especially service, and a drop in imports related to the contraction in investment. Unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, as the total number of people employed climbs to a record high.