By John O'Donnell and Robin Emmott
BRUSSELS (Reuters) - Germany is set to accelerate away from France and Italy in 2014 as the fragmented euro zone gradually recovers from its worst crisis, the European Commission said on Tuesday.
In a departure from the gloom of the crisis years, Brussels slightly increased its growth prediction for the bloc's 9-trillion-euro economy to 1.2 percent in 2014 from an earlier 1.1 percent forecast.
It was powered chiefly by a 1.8 percent jump in Germany.
But the statistics also made clear the scale of the challenge facing Italy and its new prime minister, Matteo Renzi, in turning around the bloc's third-largest economy. The Commission predicts meager growth of 0.6 percent this year.
France is expected to grow 1 percent in 2014.
"Recovery is gaining ground," said Olli Rehn, the EU commissioner in charge of economic policy. "The worst of the crisis may now be behind us," he said, cautioning, however, that the recovery was "still modest".
While the improving outlook will relieve the European Central Bank, the figures also outline how Europe still lags the United States. The U.S. economy is expected to grow by around 3 percent in 2014, buoyed by massive money printing programs that the European Central Bank has been unable to emulate.
The figures also draw a clear dividing line in the euro zone between southern countries such as Greece, struggling economically and arguing for more freedom to spend, and Germany, buoyed by strong exports and determined to enforce thrift.
Paul De Grauwe, an economist with the London School of Economics, blamed Germany for hampering the ECB and said the time had come for the central bank to act following its creation of a special emergency program to buy state bonds through outright monetary transactions, known as OMT.
"They need to take some risks," he said. "The ECB has been bold once when they announced OMT but since that it has done nothing."
"The Germans are afraid of their own shadow. The U.S. has been willing to go further in stimulating the economy. As a result, growth has accelerated," he said.
ECB President Mario Draghi has less freedom, however. Under its statutes, it is banned from buying bonds directly from governments, although it can find ways to buy them from banks, for example, on the open market or accept them as security in return for finance.
Markets expect the ECB's next move could be to offer a further round of cheap, long-term loans to banks.
Complicating the picture further for the ECB, the Commission sees consumer price inflation at well below the central bank's target of around 2 percent. Inflation is likely to be 1 percent in 2014 and 1.3 percent next year.
(Additional reporting by Leigh Thomas in Paris Editing by Jeremy Gaunt)
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