Brussels, 07/11/2012 (Agence Europe) - After a short period of recession in 2012, the European Union and eurozone economies will return to growth in 2013 but the recovery will be weak because of the slowing of the global economy, which is impacting on exports, budget consolidation and the structural reform measures currently under way and curtailing domestic consumption almost everywhere in Europe. All the same, the European Commission unveiled its autumn economic forecasts on Wednesday 7 November and urged the member states to continue with their austerity packages but did not make any specific demands for further deficit reduction by any country in particular. The Commission says it will be analysing member states' performance in the light of both their structural and their nominal budgets, thus taking account of the impact of the economic crisis. The Commission proposes to end the excess deficit proceedings against Malta.
Euro Commissioner Olli Rehn said: “The EU economy is sailing forward through rough waters. This will last for some time. Member states should continue to combine sound fiscal policies with structural reforms to stimulate growth and create jobs. Macroeconomic imbalances are gradually reducing. That's why member states are encouraged to substantiate their measures of fiscal policy soon or in the course of 2013.” He added that the decisions taken to deal with the sovereign debt crisis (introducing the European Stability Mechanism and bank recapitalisation) would help restore investor confidence.
According to the Commission's autumn forecasts, growth will shrink by 0.3% this year in the EU27 and 0.4% in the eurozone. EU27 and eurozone GDP will grow slightly in 2013, by 0.4% and 0.1% respectively, picking up in 2014 to 1.6% and 1.4% respectively. Inflation will be reined in and fall below the 2% level in 2013 in the eurozone (2.5% in 2012, 1.8% in 2013 and 1.6 % in 2014). Eurozone debt is expected to continue to expand to an average of 94% in 2013 and then remain stable. Unemployment is expected to peak in 2013 at 10.9% in the EU27 and 11.8% in the eurozone, but to start to fall in 2014.
Differences between Member States. Rehn did not attempt to hide the huge differences in the economic situation within the eurozone. The economies of Germany (GDP growing by 0.8% in 2013 and 2% in 2014), France (GDP growing by 0.4% in 2013 and 1.2% in 2014) and the Netherlands (0.3% and 1.4%) will pick up. The Commission's economic growth forecasts are less optimistic than the French government's (0.8% in 2013) because of differing estimates of foreign demand, but Rehn hailed the measures announced the previous day to stimulate competitiveness among French businesses, calling for more information to determine how they will affect the French deficit figures.
Italy will remain in recession (to the tune of -2.3 % in 2012 and -0.5 % in 2013) and in Spain (-1.4% in both years) before returning to growth in both countries in 2014 (0.8%). Rehn expressed concern at the slowing in Italian public purse corrections and the slower rate of reduction in the country's debt, particularly against the backdrop of low growth prospects for the Italian economy. Commenting on Spain, the Commissioner made no bones about the fact that his department's forecasts for the Spanish deficit (6.4% in 2014) are well above the 3% cut-off point, saying that this is why he had encouraged Spain to unveil new structural adjustment measures in 2013. He said he would be raising this question shortly. Asked whether Spain should ask for aid from the eurozone, Rehn simply said that aid measures, like the preventative credit lines in the ESM and the ECB's OMT programme for buying up debt were in place and the Commission was prepared to help and monitor.
The forecasts for countries in receipt of aid differ enormously. Growth will pick up in Ireland (1.1% in 2013 and 2.2 % in 2014), for example, with Rehn admitting that the Commission's growth forecasts were smaller than the Irish government's. Portugal is expected to come out of recession in 2014 (a 2% fall in GDP in 2012, a 1% fall in 2013 and 0.8% growth in 2014), as is Greece, but on a different scale: -6%, -4.2 % and 0%) (see separate article).
Commenting on Slovenia's economic woes, Rehn urged Ljubljana to introduce “legal tools” to restore health to the country's banking system. (MB/transl.fl)