The forecasts released this week (4 Nov) reveal that GDP growth is expected to reach 1.3% in the EU and 0.8% in the euro area for 2014 as a whole. Growth will likely slowly rise throughout 2015, resulting from improving foreign and domestic demand. According to the Commission, strengthening of the financial sector and structural reforms starting to bear fruit will contribute to more growth in 2016.
The new Commission is understandably not enthusiastic about these results, above all in its first working week. Jyrki Katainen, European Commission Vice-President for Jobs, Growth, Investment and Competitiveness, said: “The economic and employment situation is not improving fast enough.” Encouragingly, the Commissioner went on to say that “Accelerating investment is the linchpin of economic recovery.”
With regard to employment rates, the new forecasts also offer little in the way of ground-breaking changes. Job creation has been moderate and unemployment levels are down slightly from extremely high rates. The Commission is encouraging labour market improvements should occur towards the end of the forecast horizon if the slight economic recovery occurs as expected. The unemployment rate is set to decrease to 9.5% in the EU in 2016.
Commenting on the forecasts, Secretary General Klaus Heeger said: “A weak recovery is expected where countries are not investing in people and in jobs. While the 300€ billion investment package will be important, it is equally important to have more details about where the funds are coming from and where the investment will be going. Growth for the sake of growth will not help people’s social situation in Europe.”
In response to the Commission’s public consultation on the Europe 2020 Strategy, which among other things sets targets for employment rates in Europe, CESI called on the investment to be targeted at achieving these targets. In more closely linking the fresh investment funds to approaches as for instance proposed by the recent social investment package, funding could be more targeted to promote social reforms which would lead Europe away from a race to the bottom.
The press conference was jointly held by Jyrki Katainen, European Commission Vice-President for Jobs, Growth, Investment and Competitiveness and Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs (pictured above, ©European Commission.)
For more information on the Autumn forecast 2014 please visit the Commission’s website.