The International Monetary Fund estimates this year's GDP growth in the EU at 1.6 per cent, from 2.5 per cent last year, while growth in the 12-member eurozone will fall 0.8 per cent year on year to 1.2 per cent. In contrast, the IMF estimates China's economy will enjoy a robust 9 per cent GDP growth for the year, while the US will put on 3.5 per cent.

New member states - in particular the 10 eastern entrants of 2004 - have emerged as the best means of kick-starting the world's largest economic bloc, providing an environment for rapid growth free of the outdated work practices and expensive welfare systems that hinder older members.

The enormous growth potential of the 10 newcomers, with their low-cost but highly educated labour forces, is flagged by Alain Bourrier, the London-based co-fund manager of Merrill Lynch's Emerging Europe Fund.

'The convergence process in emerging Europe has provided a unique opportunity for wealth creation, both for recent entrants such as Poland, the Czech Republic and Hungary and also for countries such as Turkey, whose accession - if agreed - would provide even more opportunities,' he said.

Despite the long-term economic benefits, further EU enlargement remains a highly contentious social issue. The group suffered the biggest setback since its inception when French and Dutch voters gave a resounding 'no' in this year's referendums on a Europe-wide constitution. The results were widely seen as a rejection - on cultural grounds - of plans to expand the bloc.

Continuing job insecurity also meant the referendum became an outlet for protest against a cheap workforce moving into western Europe and EU manufacturing bases relocating to new member states. As a result, the future for EU wannabes Romania and Bulgaria is now uncertain, and the prospects for Turkey, the controversial candidate that started accession proceedings this year, look grim.

Austria, which takes over the rotating EU presidency from Britain on Sunday, is encumbered with the historical baggage of conflict with the old Ottoman Empire and stands at the forefront of opposition to Turkey's membership.

A more immediate problem, however, was emerging far beyond Europe's eastern fringe.

China, which counts the EU as its biggest commercial partner, saw bilateral trade volume with the bloc leap 23 per cent year on year for the first 11 months of the year to US$197 billion. The mainland's General Administration of Customs figures rank China's trade volume with the EU above that for the US, in second place, and for Japan, in third. But tensions afflict even the closest of partnerships.

Beijing and Brussels pulled back from the brink of an all-out trade war in June when Commerce Minister Bo Xilai and EU Trade Commissioner Peter Mandelson struck a deal on textile imports from the mainland.

To protect embattled EU clothing manufacturers, imports of 10 categories of Chinese textiles were restricted to growth of no more than 8.5 per cent to 12.5 per cent a year until the end of 2007.

It took a month for the Brussels bureaucracy to enact the new quota regulations and in the interim period, European retailers rushed to place last-minute orders for Chinese textiles.

By the time the rules took effect, on July 12, Europe's ports were piled high with cheap clothing that exceeded the quotas. Mr Mandelson was forced to broker a peace deal in the ensuing 'bra war' between those EU states that did not want their markets flooded and anxious retailers who faced the prospect of empty shelves.

The disagreement with Beijing came at a time when figures from the European Commission show the EU's trade deficit with China was burgeoning at Euro64.9 billion ($598.06 billion) for the six months to August, up from Euro47.3 billion over the same period last year.

Meanwhile, an unseemly spat over the EU's budget for 2007-2013 was brewing, only to spill over just as Mr Mandelson was fighting Europe's corner at the sixth ministerial conference of the WTO in Hong Kong.

With an 11th-hour budget deal struck in Brussels just as the WTO meeting was winding down, the European trade commissioner was in no position to offer the farm subsidy and tariff cuts that might have helped the Doha Round become reality.

Despite protests at home, Prime Minister Tony Blair relinquished Euro10.5 billion of Britain's closely guarded rebate - a drop of 20 per cent - and France agreed to a budget review in 2008-2009 that could see cuts in its cherished farm subsidies. The deal agreed by Europe's 25 leaders saw the budget grow to Euro862.4 billion to meet the initial costs of further enlargement.

Away from the budgetary wrangling, the day-to-day challenge of making ends meet continued for many of the EU's 460 million citizens. Steep oil prices, stubbornly high unemployment and the European Central Bank's decision on December 1 to increase interest rates - for the first time in five years - by a quarter of a point to 2.25 per cent, offer little prospect of a consumer-led recovery any time soon.

Amid the gloom, however, the euro's 13 per cent weakening this year against the US dollar offers a glimmer of hope for the bloc's exporters.