EU Expects `Robust' Growth in Early 2007, Draft Says
The European Commission expects Europe's economy to ``remain strong'' in coming months and inflationary pressures to be eased by the drop in oil prices and the euro's strength, a confidential draft document shows. While Germany's sales-tax increase on Jan. 1 could ``take its toll'' on euro-area growth, ``economic activity will remain strong in early 2007,'' according to the document obtained by Bloomberg News. At the same time, ``falling oil prices and an appreciating euro should alleviate price pressures in the near term.''
The European Central Bank has signaled it would raise borrowing costs in March for a seventh time since late 2005 to keep inflation in check. ECB President Jean-Claude Trichet said Jan. 11 that investors' expectations for a March increase may be justified, as the pace of growth gives companies room to raise prices and employees leeway to seek more pay.
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