The European Commission has said the Irish economy will grow by just 0.9pc next year.

According to its autumn economic forecast, the EC believes the Irish economy will not reach the 1.75pc rate predicted by the Irish Government in its four year plan.

The Commission also said the Government’s 2012 growth projection of 3.25pc is too optimistic. It says 2012 growth is more likely to be 1.9pc.

Overall, the EC said European growth will experience soft growth next year and a stronger rebound in 2012. It said growth in 2011 will hit 1.75pc and 2pc in 2012.

The recovery is “making progress,” though the “shock of the global crisis still casts its shadow over the economy,” the commission said. “The level of uncertainty for the outlook continues to be very high.”

Europe’s unemployment rate is projected to fall to around 9pc in 2012, with the public deficit declining to about 4.25pc of GDP.

Inflation is to be relatively subdued across the EU over the coming period, according to the forecast. HICP inflation is projected to average 2pc in the EU this year and next, easing to around 1.75pc in 2012.

European Commissioner for economic and monetary Affairs, Olli Rehn said, “The economic recovery has taken hold. I am encouraged by the prospect that employment is finally set to improve next year in Europe.

“Public deficits are starting to decline thanks to the consolidation measures taken and to the resumption of growth. However, this recovery is uneven, and many Member States are going through a difficult period of adjustment. A determined continuation of fiscal consolidation and frontloaded policies to enhance growth, are essential to set the sound basis for sustainable growth and jobs. The turbulence in sovereign debt markets underlines the need for robust policy action.”

Commenting on Ireland, Rehn said, despite the modest growth forecast, the Irish economy has the ability to rebound from the recession.

“While there are serious challenges concerning public finances…and the banking sector…Ireland is a flexible and open economy which has the capacity of rebounding relatively rapidly from this recession,” he told reporters in Brussels today.

“It’s encouraging for Ireland and Europe that Ireland has this capacity. The Irish are smart, resilient and stubborn people and they will certainly overcome this challenge.”