BRUSSELS: Years of steady decline in the European Union's unemployment rate may end in 2008/09 as the economy slows, a European Commission report said on Monday.

"Recent developments such as financial turmoil, rising energy and commodity prices and falling consumer confidence may result in the macroeconomic outlook deteriorating further," the report by the European Union executive said.

The Commission expects economic growth in the 27-nation bloc to slow to 1.8 per cent next year from 2.0 per cent seen this year and 2.8 percent in 2007. "The so far resilient EU economy is expected to experience a slowdown in 2008-2009 and the improvement in the labour market will be less marked than recently, with a slower pace of employment growth and a halt to decreases in the unemployment rate," it said.

The Commission forecast earlier this month that unemployment in the EU would fall to 6.8 per cent of the workforce this year from 7.1 per cent in 2007, and remain unchanged in 2009. Employment growth would slow to 0.5 per cent next year from 0.8 per cent seen this year and 1.7 per cent in 2007.

In the 15 countries now sharing the euro, unemployment is forecast to increase next year to 7.3 per cent from 7.2 per cent seen this year -- the best result on record -- with employment growth slowing similarly to the wider EU.