The European Central Bank yesterday forecast that the eurozone would expand this year and in 2011 much more strongly than previously expected, ruling out a “double dip” back into recession.

However, the bank betrayed concern about the outlook by warning that its forecasts could prove over-optimistic, and extending into next year the supply of emergency liquidity to the region’s banks.

Jean-Claude Trichet, ECB president, said the “very substantial” upward forecast revision followed an exceptional recent growth spurt. Although growth would cool in the second half of the year, he expected a continuing “positive underlying momentum” in the eurozone.

But Mr Trichet surprised analysts by warning that risks to the outlook were “slightly tilted to the downside”, indicating a lack of faith in the ECB staff’s forecasts.

Risks included weaker growth “in other advanced economies” – an obvious reference to the US, although Mr Trichet said the ECB had never expected “extraordinarily dynamic” growth on the other side of the Atlantic.

The ECB’s caution about its economic forecasts reflected fears about raising false expectations. For this year, it expected growth in a range with a mid-point of 1.6 per cent compared with 1 per cent anticipated in June. For 2011, it expected 1.4 per cent growth, compared with the 1.2 per cent expected previously.

Mr Trichet also hinted at disagreements on the ECB’s 22-strong governing council over the pace at which it is unwinding exceptional measures taken to support the eurozone banking system since the collapse of Lehman Brothers in late 2008.