Brussels, 29/10/2003 (Agence Europe) - The European Commission published the Autumn Economic Forecasts 2003 2005 for the euro area, on Wednesday. Growth in 2004 is expected to sped up to 1.8% of GDP in the euro zone and 2% in the EU, following results in 2003 that are rather disappointing. 0.4% growth is expected in GDP in he euro zone and 0.8% in the EU. The Commission confirms the worsening budgetary situation in Europe and warns that public deficits in German and France would remain above the 3% reference mark of GDP until 2005 and set in the Stability Pact (se below). Another reasons for worry: for the first time since 1994 the euro zone is expected to registers a fall in employment figures (a loss of 200,00 jobs).
Addressing the press on Wednesday, Commissioner Pedro Solbes declared that the encouraging signs demonstrated that "the worse is behind us". The commission is expecting growth in the euro zone to approach 2.3% in 2005 (2.4% for the EU). Mr Solbes said that , "Despite the substantial efforts in the implementation of the Lisbon strategy, growth potential in Europe remains rather low and more structural reforms are need". He also stressed that the EU's major challenge was to increase this growth potential and this time they should make sure they do not miss this opportunity. In 2003 the Commission expects negative growth for the Netherlands (-0.9%) and in Portugal (-0.8%), no growth in Germany and slight growth in France 0.1% and In Italy 0.3%. Growth is expected to be "robust".: 2.3% in 2003 then 2.9% in 2004 and in Greece 4.1% in 2003 and 4.2% the year after. In 2004 it expects growth of 1.6% in Germany and 1.7% in France and 1.5% in Italy. For 2004 it expects 1.6% growth in Germany and 1.7% in France and 1.5% in Italy. For the euro zone, the Commission is expecting the following performance: +2.0% in the United Kingdom in 2003 then 2.8% in 2004; +0.8% in 2003 and +2% in 2004 for Denmark; + 1.4% in Sweden in 2003 and 2.2% in 2004. It also expects the average rate of inflation in the euro zone this year to be 2.1% (2.3% o, 2002) then 2% in 2004 and 1.7% in 2005.
Deficits in France and Germany could be more than 3% until 2005
Commission forecasts demonstrate that public deficits in Germany and France are expected to remain above 3% of GDP until 2005. Moreover, if polices do not change Portugal and Italy could become part of the club of Member States that exceed the 3% of GDP leading up to 2005. Mr Solbes sought to minimise the scale of these forecasts and underlined that they had been established before the definitive adoption of the countries' budget for 2004. "It is true that most Member States are committed to the budgetary process and tour forecasts for the deficits and debt should be considered with caution at this stage", he declared, adding that "I sincerely hope that all the countries will do their best" to make their finances healthy". In reply to question, Mr Solbes excluded at this stage a warning procedure against Italy whose public deficits are approaching the 3% ceiling. The commissioner indicated that the Commission would follow "with attention" the development of Italian public finances but "it is not yet the time for going any further".
Mr Solbes recognised that "public finances are not in good health". He then pointed out that the rate of public deficit in euro zone administrations was getting deeper with a 2.8% average of GDP in 2003 (2.7% in the EU following an average of 2.2% in 2002 in the euro zone and 1.9% in the EU. Mr Solbes confirmed that the budgetary balance of public administrations was expected to get worse in 2003 in all Member States of the EU except in Belgium. The Commission expects Germany to have a public deficit of 4.2% of GDP in 2003, 3.9% in 2004 and 3.4% in 2005 after 3.5% in 2002. France is counting on a 4.2% deficit this year, 3.8% in 2004 and 3.6% in 2005. Mr Solbes explained that a second group included Member States whose deficits increased this year or was expected to approach 3%: Italy 2.6% in 2003, then 2.8% in 2004 and 3.5% in 2005, Netherlands 2.6% in 2003, then 2.7% in 2004 and 2.4% in 2005, Portugal 2.9% in 2003, then 3.3% in 2004 and 3.9% in 2005 and the United Kingdom 2.8% in 2003, then 2.7% in 2004 and 2.4% in 2005. The third group brings together countries whose deficits are expected to remain less 1¾ % of GDP in 2003, namely Greece, Ireland, Luxembourg and Austria. The last group that are again expected to have a surplus in 2003: Spain, Belgium, Denmark, Finland and Sweden.