EU bumps up growth forecast, amid jobless recovery

Unemployment remains high in those countries that use the single currency, according to a separate set of commission figures, also released on Tuesday, at 9.9 percent in January, down a sliver from the 10 percent seen in December and 10 percent this time last year.

But for the EU27, unemployment remains the same 9.5 percent it was in January 2010, albeit down from 9.6 percent in December.

Jobless rates were highest on the bloc's periphery, particularly the Baltics, with Spain on 20.4 percent, Latvia on 18.3 percent and Lithuania on 17.4 percent.

Women and young people have been hit hardest, with the female unemployment rate increasing from 10.0 percent to 10.1 percent in the euro area over the last year and from 9.3 percent to 9.5 in the whole of the EU.

Youth unemployment is down a fraction, but still very high in many countries, at 19.9 percent in the eurozone and 20.6 in the EU27, down from 20.2 and 20.7 respectively last year.

In Spain, home to what must now be seen as crisis levels of youth joblessness, the percentage of young people out of work has climbed to 43.1 percent up from 39.7 last January. But even in Germany, the EU's economic powerhouse, youth unemployment remains 8.3 percent, even if this is amongst the lowest such rates on the continent.

Also tempering the good growth news is headline inflation figures revised upward on the back of soaring food and energy prices to 2.2 percent for the eurozone from previous predictions for the year of 1.8 percent. For the whole of the EU, inflation figures are now at 2.5 percent for 2011, up from 1.5 percent predicted last November.

The upward tick in growth comes from an average based on numbers from a representative seven key member states.

Germany will see an expansion of 2.4 percent, a hike from an earlier prognosis of 2.2 percent while France will see a 1.7 percent increase up from the earlier forecast of 1.6 percent.

The UK has seen its forecast revised downward though, from 2.2 in the autumn to 2.0 in the figures released on Tuesday.

Italy however will see growth of just 1.1 percent and Spain an anaemic 0.8 percent.

European economy chief Olli Rehn issued a warning to Italy on the back of the figures, saying: "Italy has benefited less than other euro area countries from the rebound in global trade. This is probably a result of a low level of exports to emerging countries, which are growing faster."

He blamed "a loss price competitiveness over last decade" and called on Italy to work to restrain wages.

"Substantial wage moderation would help the Italian economy to suffer further loss of competitiveness."

He said that similar concerns are on his mind for much of the bloc, although in the longer term. At the moment "overall, so far wage demands have remained relatively subdued," as a result of the fears on the part of workers produced by the crisis.

"Which is one of the reasons we expect core inflation to remain low this year even if we see headline inflation because of higher energy and food prices."

"Having said this, there are differences between countries. It is very important that policy makers pay attention to this to make sure wage demands keep in line with productivity."