Wednesday

8th Feb 2023

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

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

  • 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.

MEPs to vote on risky 'hydrogen for home heating' rule

The gas-boiler industry is pushing for hydrogen to be allowed to heat homes — but as well as being riskier for explosions and exacerbating asthma, experts dub domestic hydrogen 'a dangerous distraction'.

Hawkish ECB rate-rise 'puts energy transition at risk'

The European Central Bank raised interest rates by another 0.5 percent to a 14-year high, and expects to hike rates by another half percent in March. But what does that mean for the green transition?

Opinion

The return of Lula means now is the time for EU-Mercosur deal

The EU must realise the need for a trade agreement with Mercosur. The timing has never been better. The recent election of the president of Brazil, Lula da Silva, marks a fresh start to move forward on the Mercosur Agreement.

Latest News

  1. Polish MEP also went on freelance Azerbaijan trip
  2. Why Europe's interminable compromises are a virtue
  3. Wales' message to Europe: 'We'll be back'
  4. MEPs to vote on risky 'hydrogen for home heating' rule
  5. The man who won't stop filing info requests until every EU doc is public
  6. EU hands Libya coast guard boats ahead of migration summit
  7. Eleven suicides daily — Spain's not-so-silent pandemic
  8. The return of Lula means now is the time for EU-Mercosur deal

Stakeholders' Highlights

  1. EFBWWEU Social Dialogue review – publication of the European Commission package and joint statement of ETUFs
  2. Oxfam InternationalPan Africa Program Progress Report 2022 - Post Covid and Beyond
  3. WWFWWF Living Planet Report
  4. EFBWWEFBWW Executive Committee report on major abuses, labour crime and subcontracting
  5. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  6. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains

Stakeholders' Highlights

  1. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  2. European Committee of the RegionsRe-Watch EURegions Week 2022
  3. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal

Join EUobserver

Support quality EU news

Join us