Brussels predicts GDP growth in Ireland will reach 3.5% in 2015, down from 2014’s 4.8% high but still ahead of Britain and Germany.

Taoiseach Enda Kenny, who has described Ireland's economic recovery as 'fragile'. Photograph: Niall Carson/PA

Ireland’s tiger economy roared back to life last year and will retain its crown in 2015 as the fastest growing in the EU, according to Brussels’ latest forecasts.

An export boom has put Dublin at the top of the growth league while the bulk of the EU continues to pay the price of internal wrangling over Greece and the after-effects of strict austerity measures.

The pace of GDP growth in Ireland will dip to 3.5% in 2015 after reaching 4.8% in 2014, but remains ahead of Britain’s 2.4% and Germany’s 1.5%, the European commission said in its winter 2015 forecast.

Ireland’s debt-to-GDP ratio remains one of the highest in the EU at 115%, unemployment is in double digits and prime minister Enda Kenny has described the recovery as fragile in recent speeches.

The review of Ireland’s economy also warned it was subject to volatility – demonstrated by the strong growth in the first nine months of 2014 and a flat performance in the last three months. But the commission said the strong rate of expansion will continue into 2016 when the GDP measure of economic activity, which includes Ireland’s multinational sector, will grow by 3.5%.

On unemployment, the commission report said the jobless rate will drop from 11.1% for 2014, to 9.6% in 2015 and 8.8% in 2016, bringing Ireland below the EU average this year and next year.

For the EU as a whole, Brussels said growth this year is forecast to rise to 1.7% and to 1.3% for the euro area.

Like most EU countries, Ireland will benefit from the fall in oil prices, which will not only bring down inflation and increase disposable incomes, but make it cheaper for exporters to ship goods abroad. A sharp decline in the value of the euro will also support the export sector. The euro has fallen by more than 10% against a basket of currencies in the past six months and by almost 20% against the dollar.

Irish consumers have already renewed their appetite for spending, according to the latest KBC Bank Ireland/ESRI Consumer Sentiment Index, which hit a nine-year high in January. It was the fourth-largest monthly increase since the survey began 19 years ago.

The survey’s compilers said rising property prices, low to negative inflation and recent tax cuts had probably lifted confidence, good news for the government before parliamentary elections in just over a year.

“The January survey shows that for the first time since mid-2007 more consumers expect their household finances to improve rather than worsen in the year ahead,” said KBC chief economist Austin Hughes. “This marks a notable change in thinking.”

Spain was congratulated by the commission for accelerating its rate of growth in the latter stages of 2014 and going into 2015 as the fastest-growing of the major EU economies.

Madrid’s rightwing government has distanced itself from Greece’s calls for debt writeoffs and bridging loans. It’s economy is predicted to grow by 2.3% in 2015, up from 1.7% in the previous forecast.

The situation in France and Germany, which account for the bulk of EU output, will continue to improve, though only slowly. French GDP will rise from 0.4% in 2014 to 1% in 2015 while Germany will match 2014’s 1.5% rise in GDP over the coming year.

The improving picture painted by the commission was offset by a warning that the EU faced a widening gap between wealthy nations and those worst hit by the crisis. The report said that although many debtor nations had implemented painful changes, especially to labour markets by cutting wages and benefits, Germany, Sweden, the Netherlands and Denmark had done little to boost demand. Instead they continued to run large trade surpluses with southern Europe that made it harder for them to expand.