Euro zone unemployment to remain at record high

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EU: Euro zone unemployment to remain at record high
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Euro zone unemployment will remain near its record high for the next two years, the European Commission said in its latest economic forecast, amid subdued economic growth.

In its autumn forecast, the Commission said it expected unemployment in the 17-country euro zone to remain around 12.2 percent until 2015, when it is forecast to fall to 11.8 percent. Official figures last week revealed that unemployment remained at 12.2 percent in September , signaling that the region's faltering economic recovery has yet to be felt in the job market.

(Read more: Manufacturing improves amid euro zone recovery )

The euro zone exited recession in the second quarter , with gross domestic product expanding by 0.3 percent from the first three months of the year. The data signaled the end of the longest contraction in continental Europe in over 40 years.

But the Commission said it still expected the euro zone's economy to shrink this year - by 0.4 percent, before recovering to grow by 1.1 percent in 2014. This forecast marked a slight downward revision from its earlier prediction of 1.2 percent growth next year, as a result of weaker private demand and investment.

The annual inflation rate in the 17-country bloc is also expected to remain low, at 1.5 percent this year before dropping to 1.4 percent in 2015 - significantly below the ECB's target of just below 2 percent.

(Read more: Pressure on ECB to cut rates after inflation shock )

Last week, surprisingly low inflation data for the euro zone sparked concerns that the 17-country euro zone is heading for a period of deflation. HICP (Harmonised Index of Consumer Prices) inflation fell to a near-four-year low of 0.7 percent in October, year-on-year.

While on Tuesday, producer prices for the euro zone in September were also weak, up just 0.1 percent on the month as a result of higher energy prices, and down 0.9 percent year-on-year.

These figures - combined with Tuesday's economic forecast - is likely to boost the number of economists expecting the European Central Bank (ECB) to cut interest rates when it meets on Thursday.

EU accounts

Meanwhile, the independent European Court of Auditors published its annual report on the EU budget for 2012 on Tuesday.

It signed off the accounts, but stressed that "errors persist in all of the main spending areas."



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