Thursday

23rd Nov 2017

EU bumps up growth forecast, amid jobless recovery

  • Rehn: 'Italy has benefited less than other euro area countries from the rebound in global trade' (Photo: European Commission)

The European Commission on Tuesday (1 March) revised upwards slightly its growth forecast for the eurozone and the whole of the EU in 2011. However, the good news is tempered with the knowledge that the employment situation has remained effectively flat since last January.

The eurozone is expected to see growth of 1.6 percent in the eurozone and 1.8 percent for the bloc this year, up 0.1 percent on forecasts for the year issued last November.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Unemployment remains high in those countries that use the single currency, according to a separate set of commission figures, also released on Tuesday, at 9.9 percent in January, down a sliver from the 10 percent seen in December and 10 percent this time last year.

But for the EU27, unemployment remains the same 9.5 percent it was in January 2010, albeit down from 9.6 percent in December.

Jobless rates were highest on the bloc's periphery, particularly the Baltics, with Spain on 20.4 percent, Latvia on 18.3 percent and Lithuania on 17.4 percent.

Women and young people have been hit hardest, with the female unemployment rate increasing from 10.0 percent to 10.1 percent in the euro area over the last year and from 9.3 percent to 9.5 in the whole of the EU.

Youth unemployment is down a fraction, but still very high in many countries, at 19.9 percent in the eurozone and 20.6 in the EU27, down from 20.2 and 20.7 respectively last year.

In Spain, home to what must now be seen as crisis levels of youth joblessness, the percentage of young people out of work has climbed to 43.1 percent up from 39.7 last January. But even in Germany, the EU's economic powerhouse, youth unemployment remains 8.3 percent, even if this is amongst the lowest such rates on the continent.

Also tempering the good growth news is headline inflation figures revised upward on the back of soaring food and energy prices to 2.2 percent for the eurozone from previous predictions for the year of 1.8 percent. For the whole of the EU, inflation figures are now at 2.5 percent for 2011, up from 1.5 percent predicted last November.

The upward tick in growth comes from an average based on numbers from a representative seven key member states.

Germany will see an expansion of 2.4 percent, a hike from an earlier prognosis of 2.2 percent while France will see a 1.7 percent increase up from the earlier forecast of 1.6 percent.

The UK has seen its forecast revised downward though, from 2.2 in the autumn to 2.0 in the figures released on Tuesday.

Italy however will see growth of just 1.1 percent and Spain an anaemic 0.8 percent.

European economy chief Olli Rehn issued a warning to Italy on the back of the figures, saying: "Italy has benefited less than other euro area countries from the rebound in global trade. This is probably a result of a low level of exports to emerging countries, which are growing faster."

He blamed "a loss price competitiveness over last decade" and called on Italy to work to restrain wages.

"Substantial wage moderation would help the Italian economy to suffer further loss of competitiveness."

He said that similar concerns are on his mind for much of the bloc, although in the longer term. At the moment "overall, so far wage demands have remained relatively subdued," as a result of the fears on the part of workers produced by the crisis.

"Which is one of the reasons we expect core inflation to remain low this year even if we see headline inflation because of higher energy and food prices."

"Having said this, there are differences between countries. It is very important that policy makers pay attention to this to make sure wage demands keep in line with productivity."

Analysis

Crumbs of comfort don't hide Europe's employment divide

On another day of drama and strife for the eurozone it was hardly surprising that a press notice revealing that unemployment in the eurozone has edged down to its lowest rate in more than three years was barely noticed.

Opinion

The erosion of southern Europe

“Europe is back!” is the new, though cautious market mantra. Certainly, Europe will ultimately recover, but it will be a different Europe. Current hopes are inflated, as evidenced by the erosion of southern Europe.

Commission warns Italy over high debt level

The Italian government must demonstrate it is making an effort, or the EU will consider launching a procedure. France and Romania are also under scrutiny.

News in Brief

  1. December euro summit still on, Tusk confirms
  2. EU calls for end to Kenya election crisis
  3. Report: Israeli PM invited to meet EU ministers
  4. French banks close Le Pen accounts
  5. Commission relaxes rules on labelling free range eggs
  6. Commission issues €34m fine over car equipment cartel
  7. Estonian presidency 'delighted' with emissions trading vote
  8. Mladic found guilty of genocide and war crimes

Stakeholders' Highlights

  1. Idealist Quarterly"Dear Politics, Time to Meet Creativity!" Afterwork Discussion & Networking
  2. Mission of China to the EUAmbassador Zhang Ming Received by Tusk; Bright Future for EU-China Relations
  3. EU2017EEEstonia, With the ECHAlliance, Introduces the Digital Health Society Declaration
  4. ILGA EuropeFreedom of Movement For All Families? Same Sex Couple Ask EU Court for Recognition
  5. European Jewish CongressEJC to French President Macron: We Oppose All Contact With Far-Right & Far-Left
  6. EPSUWith EU Pillar of Social Rights in Place, Time Is Ticking for Commission to Deliver
  7. ILGA EuropeBan on LGBTI Events in Ankara Must Be Overturned
  8. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  9. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  10. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  11. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  12. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure

Latest News

  1. Mali blames West for chaos in Libya
  2. Orban stokes up his voters with anti-Soros 'consultation'
  3. Commission warns Italy over high debt level
  4. Mladic found guilty for Bosnia genocide and war crimes
  5. Uber may face fines in EU for keeping data breach secret
  6. EU counter-propaganda 'harms' relations, Russia says
  7. The EU's half-hearted Ostpolitik
  8. Glyphosate: 1.3 million EU citizens call for ban