Brussels, 24/04/2008 (Agence Europe) - Despite the uncertain international context, the European economy is expected to show considerable resistance in 2008. On the basis of a survey conducted among its member federations, BusinessEurope published, on Thursday 24 April, somewhat encouraging economic forecasts. Although figures have been reviewed downward (by 0.4 percentage points compared to early forecasts in November 2007 - EUROPE 9540), the message from the European organisation representing employers' federations remains cautiously optimistic. According to BusinessEurope, 2008 growth should be 1.7% in the eurozone and 2% in the EU27. Although, in an intermediary exercise in February, the European Commission was banking on almost identical figures (1.8% and 2%), it is nonetheless expected to review its expectations downward during the publication of its spring forecasts on Monday 28 April.
Several factors contribute to the relative optimism of employers: - growth in the past two years has been higher than expected; - labour market conditions have improved (companies expect to create another 2 million jobs in 2008); - corporate results remain sound; - emerging economies have dynamic demand; - the impact of high energy prices has been lower than for other economies; - and there are limited risks of major correction of real estate markets at EU level. With inflation of 2.6% on average in the eurozone in 2008 (and 2.8% in the EU27), BusinessEurope states it understands the hesitations of the European Central Bank (ECB) to lower interest rates. Given inflationary pressures, the greatest caution is therefore required for wage negotiations to come. The agreement reached in the public sector in Germany could establish a dangerous precedent and must not serve as an example for other sectors or less competitive member states. With the 1.2% productivity growth forecast in the eurozone (1% in the EU27), expected salary rises (+3.4% in the eurozone and +4.1% in the EU27) become less insignificant than expected to date. Without calling on the ECB to lower its rates, BusinessEurope explains nonetheless that a group of member employers' federations accounting for 66% of European economic activity considers monetary policy over-restrictive. The organisation therefore stresses that the ECB should not lose sight of important downside risks to growth and exchange rate developments. At this level, the euro is in an alarming situation, states Philippe de Buck, General Secretary of BusinessEurope. A firmer G8 position is hoped for to alleviate the weakness of the US dollar, as well as better coordination of positions among member states and a stronger role of the Eurogroup president at the international level.
For further information see: http://www.businesseurope.eu/Content/Default.asp?PageID=492 . (A.B.)