Monday

5th Dec 2022

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.

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

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.

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  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. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. Bad Karma
  2. Serbia now has no choice but to join EU sanctions on Russia
  3. Hungary's funds showdown in focus This WEEK
  4. EU must break Orbán's veto on a tax rate for multinationals
  5. Belarus dictator's family loves EU luxuries, flight data shows
  6. How Berlin and Paris sold-out the EU corporate due diligence law
  7. Turkey's EU-funded detention centres ripe with abuse: NGO
  8. In green subsidy race, EU should not imitate US

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us