The EU on Wednesday sharply revised its growth forecasts for this year and next, saying an accelerated vaccination drive and the bloc's landmark recovery plan would lift Europe out of recession.

According to the European Commission, growth in the 19 countries that use the euro currency will hit 4.3 percent in 2021 and 4.4 percent in 2022, compared with 3.8 percent for these years in its previous estimate given in February.

For the full 27 members of the EU, the commission said the economy will expand by 4.2 percent in 2021 and by 4.4 percent in 2022.

The pickup in growth confirms forecasts by the IMF and other data that showed a sudden increase in manufacturing and greatly improved confidence by consumers who see a happy end to the long winter of Covid-related restrictions.

EU economic affairs commissioner Paolo Gentiloni says "the shadow of Covid-19 is beginning to lift from Europe's economy".
EU economic affairs commissioner Paolo Gentiloni says "the shadow of Covid-19 is beginning to lift from Europe's economy". AFP / Gabriel BOUYS

"The shadow of Covid-19 is beginning to lift from Europe's economy," said EU economic affairs commissioner Paolo Gentiloni.

If confirmed, the European economy will in the first quarter of this year have sped past a second recession in less than year, after a slow rollout of Covid vaccines stymied a first economic recovery.

The EU also said public debt in the eurozone will be at historic levels, with a debt pile stuck at above 100 percent of annual GDP over the next two years.

But despite the historic budget-busting, Gentiloni insisted that major public spending "has been -- and remains -- essential in helping Europe's workers and companies to weather the storm".

Coronavirus