Brighter economic forecast from Brussels

Many Europeans may feel like we are still in a deep economic slump, but there are positive noises coming out of Brussels.

The European Comission has revised a forecast it made in May to say the bloc’s economy will rebound next year and accelerate in 2011.

An expansion of 0.7 percent next year and 1.5 percent in 2011 are now predicted in the euro zone.

Observers say this paves the way for major budget deficit cuts across EU member states from 2011 at the latest. But nonetheless, Brussels is still urging caution, stressing that things won’t improve overnight.

EU Economic Affairs Commissioner Joaquin Almunia said: “We are optimistic, but we see in 2010/2011 only a gradual recovery. We need to take into account, among these constraints, the deleveraging process in companies and households, a further deterioration in the labour market that is suspected in 2010 and the adverse impact of the financial crisis in potential growth.”

The commission says the economy is coming out of recession thanks to government and central bank support measures. But it says all of the steps already announced should still be implemented.

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tags: Eurozone