The economy of the European Union will report growth in the coming period, but not to a level that will significantly lower the unemployment rate, show the latest estimates of the European Union.
The unemployment rate across the EU remains at unacceptably high levels, which is why we need to modernize the economy, warned the European Commissioner for Economic and Monetary Affairs, Olli Rehn, after the European Commission autumn forecasts were made public. The EC report points to the fact that the shy economic growth rate to be reported in the coming period will nevertheless keep unemployment rates at record-high levels until 2015, because the reduction of the private sector debt and the governments’ austerity policies will continue to affect consumption and companies’ investments.
The EC estimates are far from announcing a triumphal victory over the crisis: the EU economy will stagnate in 2013 and will grow by only 1.4% in 2014. Less optimism comes from the euro zone, whose economy will shrink by 0.4% in 2013 only to report a slight growth of 1.1% next year. The EC report shows that the relatively slow economic advancement of Germany and France, the heavies of the euro zone, will not be able to support a faster recovery of the states that are on the outskirts of the monetary union. The German economy will grow by 0.5% this year and by 1.7% next year.
The forecasts for France are even grimmer, its economic growth being estimated at 0.2% in 2013 and 0.9% in 2014. If the British economy, which is outside the euro zone, has shown signs of rapid recovery, that is not the case with Italy’s and Spain’s economies, the EC says, even though Spain is supposed to overcome recession next year. Unemployment, a sensitive issue for European officials, which entailed efforts at national and community level to fight it, will drop across the EU under 11% only in 2015. In the euro zone the unemployment rate will remain high, over 12% in 2014, with prospects to drop under this level only in two year’s time.
As to central and Eastern Europe, the European Commission improved the forecasts for Poland and Hungary, but revised downwards those for Bulgaria. As regards Romania, the EC forecasts economic growth for 2013 and the next 2 years, with a 2.4% growth in 2015. For the first time the EC report will be used as a starting point for the budget negotiations between EU and national authorities. As of 2013 the EC will check the member states’ draft budgets before being submitted to parliaments, so as to prevent the emergence of a new sovereign debt crisis.