Wednesday

26th Sep 2018

Strong 2018 economy forecast spurs Commission optimism

  • "The lights are flashing green," said finance commissioner Pierre Moscovici (Photo: European Commission)

EU finance commissioner Pierre Moscovici on Thursday (3 May) brushed aside concerns about a slowing down in the EU economic recovery.

"The lights are flashing green," he told reporters while presenting the European Commission's latest forecasts.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • The EU is registering its fastest growth in a decade (Photo: European Commission)

According to the EU executive, the EU economy will grow by 2.3 percent this year and 2.0 percent in 2019, after the 2.4-percent growth recorded in 2017 - the best performance in a decade.

Unemployment is reaching a 10-year low - at 7.6 percent in 2017, 7.1 percent in 2018 and 6.7 percent in 2019 - and the number of people with a job is the highest in 20 years.

And for the first time in the eurozone's history, no country will have a deficit over three percent of GDP.

"The European economy is in really good shape," Moscovici insisted, adding that it is going through "a phase of solid and well-established expansion."

On Wednesday, the latest Eurostat figures showed that EU economy grew more slowly during the first three months of this year that at the end of last year - 0.4 percent compared to 0.7 percent.

"The first quarter doesn't change our outlook," Moscovici said.

He noted that the slower pace as due to a number of "temporary factors", such as a colder winter that had an impact on consumption.

"It's important not to put too much emphasis on temporary figures," opined Cinzia Alcidi, the head of Economic Policy Unit at the CEPS think tank in Brussels.

Alcidi told EUobserver that - like Moscovici - she would "keep a certain optimism" about the EU economic prospects.

"There can be movements of ups and downs, but we're in a phase of growth," she said, adding that results from the next two or three quarters of the year would be needed to see if some risks are materialised".

Dangerous US nexus

Last week, European Central Bank chief Mario Draghi noted "some moderation" in EU growth and warned of "risks related to global factors, including the threat of increased protectionism."

On Thursday, Moscovici conceded that "we have not moved from a black situation to a rosy situation" and that "downside risks have clearly increased and must be closely watched."

He mainly pointed at US tax and trade policies, which he said were a "dangerous nexus".

"EU growth is largely driven by trade," Alcidi noted, pointing at a potential vulnerability.

But the two EU officials were careful not to squash optimism over the economic situation.

"There is a fear that every time there is a comment, there is a reaction from the markets," Alcidi noted. "Memories from the crisis are still marked in the minds."

She said that the issue was "more sensitive" for the ECB, because it is preparing to end the quantitative easing (QE) programme of asset purchases to boost the economy.

Looking at the growth and inflation figures, she said, "there is a limited reason for QE to continue to exist," she said, adding that she did not expect a strong effect of monetary policies on EU growth.

Looking ahead, Moscovici called on EU member states to continue making efforts.

"We have to make sure we have the capacity to use macroeconomic policies in the future," he said.

No reform expectations

"We need to continue to reduce debt, we need an ambitious push to complete the economic and monetary union," he added.

With German reluctance towards a deposit insurance scheme and more risk-sharing within the eurozone, EU leaders are however unlikely to take ground-breaking decisions at their June summit.

"It's not ideal in the long term, but I would not expect consequences, because expectations [of economic actors] will not be high", Alcidi said.

She argued that there was "more interest" for the next EU budget, which the European Commission proposed on Wednesday, than for eurozone reform plans.

But she noted that "it's quite unclear if there are big changes or more a continuation of existing trends", like the decrease of the cohesion and agriculture budgets.

EU rejects US trade 'gun to the head'

EU leaders demanded a permanent exemption from US tariffs on steel and aluminium - and ruled out any bilateral trade talks within the 1 May deadline set by Donald Trump.

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

'Every group split' ahead of EU copyright vote

Political groups in the European Parliament are split about how to vote for a directive that would reform the EU's copyright regime - amid warnings that freedom of expression and creators' rights are at risk.

News in Brief

  1. UK opposition demand election if parliament rejects Brexit plan
  2. EU to have coordinated plan on AI by December
  3. No UK election before Brexit, says May
  4. Former French PM wants to be mayor of Barcelona
  5. Merkel's wingman in surprise defeat in internal party vote
  6. Orban sends thank-you letters to supportive MEPs
  7. UN chief: World suffering from 'trust deficit disorder'
  8. Stalemate in Sweden as parliament ousts prime minister

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. EU agrees 'hair-trigger' chemical weapons sanctions
  2. World upside down as EU and Russia unite against US
  3. EU court delivers transparency blow on MEP expenses
  4. Russian with Malta passport in money-laundering probe
  5. Cyprus: Russia's EU weak link?
  6. Missing signature gaffe for Azerbaijan gas pipeline
  7. Every major city in Europe is getting warmer
  8. No chance of meeting EU renewable goals if infrastructure neglected

Stakeholders' Highlights

  1. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  2. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  3. Mission of China to the EUChina: Work Together for a Better Globalisation
  4. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  5. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  6. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  7. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  8. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  9. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  10. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  11. FIFAGreen Stadiums at the 2018 Fifa World Cup
  12. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development

Join EUobserver

Support quality EU news

Join us