Brussels, 28/11/2014 (Agence Europe) - On Friday 28 November, the European Commission noted, in light of the draft budgets for 2015 of the 18 countries of the eurozone with the exception of Greece and Cyprus (see other article) that on average, budgetary consolidation will be neutral in the eurozone in 2014 and 2015.
According to the accredited data, we anticipate that the public finance cleansing policies will be “neutral overall”, said Commissioner for the Euro and Social Dialogue Valdis Dombrovskis, although differences at national level remain. According to the Commission, the right balance seems to have been struck between the need to ensure budgetary viability, given the high and growing level of public indebtedness ratios, and the requirement to consolidate economic recovery.
According to the budgetary plans submitted by the 16 countries of the eurozone, the accredited budgetary deficit of the eurozone is expected to continue its decline, to reach an average of 2.6% of GDP in 2014 and 2.2% in 2015. The number of countries which are still under an excessive deficit procedure under the stability and growth pact has dropped to six in the eurozone (Spain, France, Ireland, Malta, Portugal and Slovenia) and five outside the eurozone (Croatia, Poland, the United Kingdom), plus Greece and Cyprus, compared to 24 in the EU in 2011.
As regards public indebtedness, the accredited ratio at eurozone level is expected to remain stable in 2015 compared to 2014, at around 92.5% of GDP.
Launch of the European Semester 2015. On the same day, the Commission adopted its growth review, which marks the start of the European Semester budgetary process for 2015. Unsurprisingly, it reiterates the importance of pursuing socio-economic policy based on the following triptych: - a shot in the arm, without creating any new indebtedness, to investments in key areas (infrastructure, education, research and innovation); - renewed commitment in favour of structural reforms (reform of the employment market and of pensions, increased flexibility in the markets for products and services, reform of public administration); - continued budgetary responsibility.
The order of these three elements has been reversed compared to previous financial years, a sign of new priorities stated a few days after the presentation of the investment plan which aims to fund more than €300 billion in new investments over three years (see EUROPE 11205).
“The EU has got over the worst of the crisis, but recovery is still fragile”, Dombrovskis said. Although all member states are expected to return to growth, this remains “weak” and the economic situation is marked by extremely low inflation - 0.3% in November, according to Eurostat - and average levels of unemployment which are “still high”, at 11.5% of the active population. He stressed the importance of continuing structural reforms. “The member states which were brave enough to reform their employment markets have shown that reforms really do bear fruit. Other member states should take inspiration from this”, commented Commissioner for Employment and Social Affairs Marianne Thyssen.
According to the joint report on employment, which was published the same day by the Commission, unemployment is falling slowly, but remains at high levels in the EU28 (24.6 million people out of work in September 2014, or a rate of 10.1%). The development of unemployment in the EU continues to vary strongly, but the gaps have ceased to grow. Long-term unemployment continues to rise: from 3.9% to 5.1% in the EU28 between 2010 and 2013. Youth unemployment remains very high (21.6% in the EU28 in September), but is showing signs of improvement, whilst the proportion of young people aged between 15 and 24 who are not in employment, education or training remains high. (MB)