European Union registers 'highest economic growth rate in 10 years'

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In a regular forecast for all European Union economies, the Commission said the French budget deficit would fall to 2.9 percent of GDP this year from 3.4 percent in 2016 - making the 2017 deadline set by the European Union for the gap to shrink below 3 percent.

In Britain, by contrast, growth is projected to hit 1.5% this year and then slow to 1.3% in 2018 and 1.1% in 2019, when the country is set to leave the EU. The lowest growth will be recorded by Italy and the United Kingdom with only 1.5 percent.

As a result United Kingdom economic growth is seen slowing to 1.3% in 2018 before slumping to 1.1% in the year of Brexit. For 2018, the forecast was increased by 0.6 percentage points to 3.8 percent.

"Economic growth in the United Kingdom has been slowing since the start of the year, as higher consumer prices constrained private consumption growth", the commission report said.

"GDP growth is projected to remain robust over the forecast horizon but the pace is expected to moderate slightly", the commission says.

The optimism, the commission said, is fueled by increased private consumption, favorable lending conditions, improved economic growth around the world and falling unemployment in Europe.

That compares with 0.5% this year, the Commission said.

Despite the upbeat projections, the European Union said it still faces labor, wage and inflationary pressures that are compounded by risks posed by the U.K.'s exit from the bloc and President Donald Trump's protectionist economic policies.

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"While market reactions to recent events in Catalonia have remained contained, the risk exists that future developments could have an impact on economic growth", the Commission noted in its reports, adding that the size of the impact "cannot be anticipated at this stage".

While recovery has taken place for 18 uninterrupted quarters, it remains incomplete and atypical, because of its dependence on policy support, the continuing presence of fiscal and financial fragilities stemming from the crisis, and the subdued strength of domestic demand compared to previous recoveries.

The economies of all member states are expanding and labour markets improving, but wages are rising only slowly.

The current account surplus is forecast to be close to 10% of GDP for 2017, pushed by strong growth in exports, especially service, and a drop in imports related to the contraction in investment.

The European Commission forecasts are slightly more pessimistic than other forecasts for the United Kingdom, but given that so far this year, the United Kingdom grew by 0.3 percent in both the first and second quarters, and by 0.4 percent in the third quarter, they don't seem unduly downbeat.

Unit labour costs are projected to rise faster than the euro-area average in 2018 and 2019.

France's debt was still high at 96.9 percent and would remain at that level through 2019.

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