• EU economy is "gaining ground" after emerging from a double dip recession in 2013 - Rehn (Photo: consilium.europa.eu)

EU recovery "gaining ground", commission says

25.02.14 @ 18:22

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - The EU's economic recovery will gather speed in 2014 and 2015, the European Commission predicted on Tuesday (25 February), indicating that the worst of the economic storm which hit Europe is over.

"Recovery is gaining ground in Europe," economic affairs commissioner Olli Rehn told reporters at the European Parliament in Strasbourg, saying that the EU economy would grow by 1.5 percent in 2014 and 2 percent in 2015.

The recovery would be driven, in the main, by increased domestic demand and consumption, as Europeans and businesses become more confident about their economic prospects, he added.

The figures, contained in the EU executive's winter economic forecast, reflect a slight upgrade of 0.1 percent for both 2014 and 2015 on previous estimates by the commission, following similar upticks from The International Monetary Fund and the OECD.

After emerging from an 18 month double dip recession in spring 2013, the EU economy grew by 0.6 percent in the final nine months of the year.

But the picture across European countries is mixed. The eurozone's powerhouses, Germany and France, are expected to post growth of 1.8 percent and 1 percent, respectively, this year. For its part, Latvia, which became the 18th member of the eurozone in January, is expected to retain its position as the bloc's fastest growing economy with a 4.2 percent expansion in 2014.

The commission also expects crisis-hit Greece to register growth of 0.6 percent in 2014 and 2.9 percent in 2015, bringing an end to six consecutive years of recession.

Athens achieved its "first current account surplus since 1948 and it appears they achieved a primary fiscal surplus last year," Rehn said. "It is encouraging that business confidence is rising in Greece, Italy and Spain.”

Cyprus and Slovenia are the only two countries expected to remain in recession in 2014, although Rehn noted that all 28 EU countries would enjoy economic growth in 2015.

Average budget deficits in the eurozone are also expected to fall below the 3 percent threshold in the bloc's Stability and Growth Pact for the first time since 2008, hitting an average of 2.6 percent in 2014.

But both France and Spain are set to miss their deficit reduction targets according to the data.

The projected growth rates are too weak to boost job prospects in the bloc. Unemployment in the eurozone currently stands at 11.7 percent, compared to 10.4 percent in the EU overall, a figure which is expected to improve by 0.3 percent in 2014 and 0.7 percent in 2015.

Meanwhile, the average debt burden across the EU is expected to climb to 89.7 percent this year, and to 95.9 percent for the eurozone.

The Finnish commissioner reiterated his belief that countries should not abandon austerity programmes and economic reforms.

"The worst of the crisis may now be behind us, but this is not an invitation to be complacent, as the recovery is still modest … we need to stay the course of economic reform.”