Saturday

1st Apr 2023

EU projects dismal growth, urges investment

  • Katainen (l) and Moscovici have different views on the way out of the economic chill (Photo: ec.europa.eu)

The European Commission lowered its growth forecasts for the EU and the eurozone area, blaming the wars in Ukraine and the Middle East, and urging governments to do more to spur investments.

According to the Autumn forecast growth in the EU is now expected to be 1.3 percent of GDP this year, compared to 1.6 percent projected in spring, while the eurozone economy is to grow by only 0.8 percent, compared to the earlier projection of 1.2 percent.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

For 2015, the outlook is also pessimistic: the EU economy is expected to grow by 1.5 percent (down from 2 percent predicted in spring) and the eurozone by 1.1 percent (compared to the spring forecast of 1.7 percent).

EU "growth" commissioner Jyrki Katainen admitted that forecasts are difficult to trust, especially since all other international institutions publishing economic forecasts "have been more often wrong than right" because there are so many variables on growth, employment, and investments.

"So it's up to us now and member states to change these forecasts. If member states do their job by reforming the societies, to increase competitiveness, we can expect higher growth," he said.

A former Finnish prime minister broadly seen as a fiscal hawk, Katainen emphasised "structural reforms" as the best way out of the economic chill.

He said it was not enough to use Germany as an engine of the eurozone economy, but insisted that all countries must "play their part" in the overall economic relaunch.

Katainen was economic affairs commissioner in the last months of the Barroso commission, but now oversees several commissioners as vice-president for "jobs, growth, investments and competitiveness".

He will also be in charge of securing a €300 billion package in private and public investments, as promised by his new boss, Jean-Claude Juncker.

He spoke more about structural reforms than investments.

But his successor in the economic affairs portfolio, Pierre Moscovici, is more interested in investment and in spurring demand in sluggish economies.

Moscovici is a former French finance minister who failed to bring his country's deficit below the 3 percent threshold set by EU riles. According to the data presented Monday, France did cut back its deficit from 6.8 percent in 2010 to 4.1 percent in 2013, but the gap is now growing again: 4.4 in 2014, 4.5 next year, and 4.7 in 2016.

By comparison, Ireland cut its deficit from 32.4 percent in 2010 to 3.7 percent this year and will reach 2.9 percent next year.

Asked how credible these rules are when it comes to big member states like France, Katainen said it is not enough to look at the "nominal figures", but also at the individual economic situations, which is why the EU rules are "flexible".

Katainen praised Ireland for having the biggest growth rate in the EU this year: 4.6 percent of GDP, while France's economy is almost at a standstill: 0.3 percent growth.

Low inflation is also set to continue, mainly because of cheap energy and food on the global markets and because "we are lacking demand", Katainen said.

A "surprise" in the commission's statistics was Hungary, who topped the EU investments ranking with 12.7 percent in 2014, followed by Malta with 12 percent.

Moscovici explained that this was due to the fact that 2014 was a "peak in EU funds consumption" and that several foreign direct investments in the automotive sector were counted.

In 2015, the investments are forecast to fall back to "normal" in Hungary, at a rate of 3.1 percent.

Police violence in rural French water demos sparks protests

Protests are planned in 90 villages across France on Thursday to protest against escalating police violence that have left 200 people injured, including two people who are still in a coma, after a violent clash in Sainte-Soline over 'water privatisation'.

EU approves 2035 phaseout of polluting cars and vans

The agreement will ban the sale of carbon-emitting cars after 2035. The EU Commission will present a proposal for e-fuels after pressure from German negotiators via a delegated act, which can still be rejected by the EU Parliament.

'Final warning' to act on climate change, warns IPCC

The United Nations's report — synthesising years of climate, biodiversity, and nature research — paints a picture of the effects of global warming on the natural world, concluding there is "no time for inaction and delays."

Opinion

Dear EU, the science is clear: burning wood for energy is bad

The EU and the bioenergy industry claim trees cut for energy will regrow, eventually removing extra CO2 from the atmosphere. But regrowth is not certain, and takes time, decades or longer. In the meantime, burning wood makes climate change worse.

Opinion

EU's new critical raw materials act could be a recipe for conflict

Solar panels, wind-turbines, electric vehicle batteries and other green technologies require minerals including aluminium, cobalt and lithium — which are mined in some of the most conflict-riven nations on earth, such as the Democratic Republic of Congo, Guinea, and Kazakhstan.

Latest News

  1. EU to press South Korea on arming Ukraine
  2. Aid agencies clam up in Congo sex-for-work scandal
  3. Ukraine — what's been destroyed so far, and who pays?
  4. EU sending anti-coup mission to Moldova in May
  5. Firms will have to reveal and close gender pay-gap
  6. Why do 83% of Albanians want to leave Albania?
  7. Police violence in rural French water demos sparks protests
  8. Work insecurity: the high cost of ultra-fast grocery deliveries

Stakeholders' Highlights

  1. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains
  2. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  3. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  4. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  5. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  6. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence

Join EUobserver

Support quality EU news

Join us