An enlarged EU economy will grow at an annual rate of 4 per cent by 2008, the Commission President, Mr Romano Prodi, predicted yesterday.

The present 15 member-states would grow by an average of 3.5 per cent and the new member-states from central and Eastern Europe would enjoy growth rates of between 5 and 7 per cent.

Speaking at an economic forum in Brussels, Mr Prodi suggested the EU would have "quite a few" new members by 2004.

But he rejected as unrealistic the prospect of a "Big Bang" that would admit almost all of the 12 candidate countries at once.

"In a short time, a number of countries will come in. I don't think there will be a Big Bang, nor do I think there will be a restricted number of one or two countries," he said.

Commission officials presented an upbeat picture of Europe's economic prospects and predicted the EU would escape the worst effects of a downturn in the US economy.

But Mr Michael Deppler of the International Monetary Fund said the European Central Bank (ECB) should cut interest rates without delay and accused the EU of showing complacency in the face of the US slowdown.

Mr Deppler suggested that the Commission's prediction that the US economy would recover in the second half of this year was excessively optimistic and based on inadequate information.

Mr Herve Carree, the senior Commission official in charge of economic policy, defended the EU's analysis and claimed its forecasts were sound.

"We could go around imagining catastrophes but what use would that be?" he said.