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EU finance chiefs say economy is beating expectations

European Union finance chiefs said the economy of the €13 nations is beating expectations as the new year begins.

„The general growth situation will prove to be better than expected,” Luxembourg Prime and Finance Minister Jean-Claude Juncker said yesterday in Brussels as he attended a meeting of EU counterparts. European Monetary Affairs Commissioner Joaquin Almunia said yesterday the commission may next month lift its forecast for economic growth this year from 2.1%. Record low unemployment and falling oil prices are helping the euro-area economy to sustain its expansion after the fastest growth in six years in 2006.

European Central Bank President Jean-Claude Trichet is signaling interest rates will rise again in March after the benchmark rate was lifted six times since late 2005 to 3.5% to counter inflation pressures. „On the new information we are receiving, growth should be better than we thought,” Almunia said. He declined to comment on what the new forecasts may show when they are released on February 16. The government of Germany, Europe's biggest economy, plans tomorrow to raise its growth forecast to 1.7% from 1.4% amid expectations employment will rise.

„We are on the safe side,” German Economy Minister Michael Glos said in an interview today in Brussels. „It's better to revise up than down.” Peer Steinbrueck, finance minister of Germany, which currently holds the rotating EU presidency, told the European Parliament yesterday that growth in the full EU may exceed the commission's forecast for this year. „We can expect growth in the European Union in 2007 to reach 2.5%.” Steinbrueck said. The commission in November forecast growth of 2.4% this year for the EU, down from 2.8% in 2006. (Bloomberg)