FRANKFURT (Germany) — Thursday’s growth forecast by the European Commission for the year for 19 euro-using countries was raised. It stated that people are returning to work in consumer-facing positions after the worst coronavirus pandemic.

The EU executive branch has lowered its outlook for next years, warning that high energy costs will impact utility bills and limit people’s spending power. Logjams in supply of raw materials and rising COVID-19 infection are other obstacles that could affect the economy.

The autumn forecast by the commission raised the outlook for growth to 5%, up from 4.8% in summer predictions. However, the 2022 growth forecast fell to 4.3% from 4.5%. It forecast 2.4% for 2023.

“The European economy is moving towards recovery and expansion, but is now facing some headwinds,” said Paolo Gentiloni, EU Commissioner for Economy.

He mentioned the recent rise in COVID-19 infection rates, an energy price increase, and disruptions to supply chains that have weighed on many industries.

Gentiloni stated that despite the difficulties it faces, Europe has “virtually closed” the gap with its pre-pandemic output level, with growth rates of 2.2% in the third Quarter compared to the previous quarter. This milestone was reached earlier in the year by the U.S.

The report stated that people were able to move from unemployment support programs or government furlough support programs to work because there were fewer restrictions after the worst pandemic. 9.6% was the same month last year, but September’s jobless rate was 7.4%.

However, total employment remained at 1% below pre-pandemic levels and was expected to rise in 2023.

The government has provided substantial assistance to Europe in the form pay of salaries to furloughed workers. This recovery should continue with the support of the 807 billion euro ($925billion) recovery fund.

The report said that energy prices, which dropped sharply in 2020 but have been rising at a “tumultuous rate” over the past month and are now higher than pre-pandemic levels. This has led to an annual inflation rate of 4.1%. However, some economists believe that the rise in consumer prices will ease next year.

The EU report stated that “high wholesale energy prices are making their ways to retail prices for producers and households, but at a varying level and pace across countries, and with potential knock-on effect on consumption and business investment.”

The market prices for natural gas, which is a key fuel for electricity generation, have risen to five times their levels at the beginning of this year in Europe. This was due to a number of factors including low reserves, lack supply from Russia, and strong demand from Asia for liquid natural gas delivered by ships.