EU forecasting subdued economic recovery

Europe’s economy will continue to recover through next year, but at a subdued pace that will leave unemployment near record highs, the European Commission said Tuesday.

BRUSSELS, Belgium — Europe’s economy will continue to recover through next year, but at a subdued pace that will leave unemployment near record highs, the European Commission said Tuesday.

The Commission, the EU’s executive arm, said rising business confidence and strengthening domestic demand are expected to underpin the recovery as governments also slow the pace of austerity measures such as spending cuts and tax increases.

“There are increasing signs that the European economy has reached a turning point,” said the EU’s Commissioner for Economic and Monetary Affairs, Olli Rehn.

Growth, however, is likely to remain too weak to generate many new jobs.

The European Union’s economy is expected to grow 0.5 per cent over the second half of the year, leaving it flat for the whole year, and expand 1.4 per cent in 2014, according to the Commission’s fall forecast. Its last predictions, issued in May, had expected a drop of 0.1 per cent in 2013.

The 17-country eurozone is forecast to continue its recovery from recession, from which it emerged in the second quarter. However, over 2013 as a whole, the eurozone is still expected to record a decline of 0.4 per cent. For next year, the Commission is penciling in 1.1 per cent growth, downward marginally from its previous forecast of 1.2 per cent.

Rehn said governments’ deficit reductions and reforms “have created the basis for recovery.”

But the forecasts show that will do little to alleviate the plight of the jobless.

Unemployment in the eurozone is expected to remain at its record high of 12.2 per cent this and next year, dropping only modestly to 11.8 per cent in 2015.

In the wider, 28-country EU, which includes members like Britain and Poland who don’t use the euro currency, unemployment is expected to dip from 11.1 per cent in 2013 to 11 per cent next year.

Furthermore, despite the recovery, the eurozone’s economic output remains about 3 per cent below the level recorded in 2008, when the global financial crisis was entering its most acute phase and Europe’s debt crisis hadn’t yet started, the report said.

“It is ridiculous to celebrate GDP growth — or non-growth — of 0.0 per cent as a clear sign of recovery,” said Hannes Swoboda, the centre-left minority leader in the European Parliament.

He scolded the Commission for favouring “obsessive deficit reduction” that suffocates growth. Instead, he advocated a more balanced approach that would not reduce deficits as quickly, allowing for greater investment and job creation.

Rehn acknowledged “it is too early to declare victory; unemployment remains at unacceptably high levels.”

The Commission expects Spain and Greece to return to tepid growth next year after seeing a contraction this year. But unemployment is forecast to stay above 26 per cent in Spain through the end of next year, and to drop only slightly in Greece, from around 27 per cent now to 26 per cent.

The forecast for France, the bloc’s second-largest economy, suggested President Francois Hollande’s government might have to pass more austerity measures to meet the EU budget deficit target. The EU has given France two more years to bring its budget deficit below 3 per cent of GDP, but the new forecast puts it as 3.7 per cent in 2015.

Spain, which also secured a deadline extension this year, still seems far off with a projected budget deficit of 6.6 per cent in 2015.

Using new powers given to the European Commission to avoid a repeat of the debt crisis, Brussels is currently assessing the eurozone nations’ draft 2014 budgets. It will present its findings next week and can ask member states to amend their budgets to meet agreed targets.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Council approved a $3 million grant and a $19 million loan Tuesday to help keep Westerner Park sustainable. (Advocate file photo)
Red Deer city council approves $22M to keep Westerner Park viable after emotional debate

It’s vital ensure future success for the huge economic generator, says mayor

Red Deer Rebels goalie Chase Coward tries to find a loose puck during WHL action at the Centrium earlier this season. (Photo by ROB WALLATOR/Red Deer Rebels)
Changes on the horizon for Red Deer Rebels next season

New coach, roster adjustments among top priorities for Sutter this offseason

Renovations and construction have begun at Red Deer Dream Centre. (Photo contributed)
Renovations underway at Red Deer Dream Centre

Christian-based addictions treatment centre

Red Deer County's municipal planning commission gave approval for a new directional sign for a business located near Elnora.
(Image from Red Deer County)
Red Deer County garden centre and winery gets sign approved

Delidais Estate Winery and DA Gardens is located near Elnora

Alberta Premier Jason Kenney. THE CANADIAN PRESS/Jason Franson
Here is a list of latest COVID-19 restrictions in effect in Alberta

New mandatory health restrictions are now in effect in Alberta. Additional restrictions… Continue reading

Boston Bruins left wing Nick Ritchie (21) and Washington Capitals defenseman Brenden Dillon (4) battle for the puck during the first period of an NHL hockey game, Tuesday, May 11, 2021, in Washington. (AP Photo/Nick Wass)
Raffl’s late goal pushes Capitals past Bruins, 2-1

Raffl’s late goal pushes Capitals past Bruins, 2-1

Chicago Blackhawks left wing Alex DeBrincat (12) celebrates with teammates after scoring a goal during the second period of an NHL hockey game against the Florida Panthers in Chicago, Saturday, May 1, 2021. (AP Photo/Nam Y. Huh)
Toews’ question chases Chicago Blackhawks into offseason

Toews’ question chases Chicago Blackhawks into offseason

Wheeler has two goals, two assists as Winnipeg Jets clinch third in North Division

Wheeler has two goals, two assists as Winnipeg Jets clinch third in North Division

Depleted Raptors drop a 115-96 decision to Leonard and Clippers

Depleted Raptors drop a 115-96 decision to Leonard and Clippers

Denis Shapovalov, of Canada, tosses the ball for a serve to Ilya Ivashka, of Belarus, during the Miami Open tennis tournament Saturday, March 27, 2021, in Miami Gardens, Fla. THE CANADIAN PRESS/AP/Wilfredo Lee
Canadian Felix Auger-Aliassime upsets Diego Schwartzman at Italian Open

Canadian Felix Auger-Aliassime upsets Diego Schwartzman at Italian Open

Philadelphia Flyers' James van Riemsdyk (25) and Sean Couturier (14) celebrate past New Jersey Devils' Yegor Sharangovich (17) after a goal by van Riemsdyk during the third period of an NHL hockey game, Monday, May 10, 2021, in Philadelphia. (AP Photo/Matt Slocum)
Flyers drop from trendy East favorite to another lost season

Flyers drop from trendy East favorite to another lost season

André Gauthier is shown in a handout photo. Gauthier, a Canadian geologist who spent six years in and out of jail in Dubai after he allegedly uncovered fraud in a gold company, finally is back home in Quebec City after his release last week. THE CANADIAN PRESS/HO-Detained in Dubai MANDATORY CREDIT
Canadian geologist detained in Dubai for six years is back home after charges dropped

Canadian geologist detained in Dubai for six years is back home after charges dropped

This undated photo provided by the North Dakota Game and Fish Department shows a group of bighorn sheep in North Dakota. Alberta's environment department has known for years that toxins from old coal mines are contaminating populations of the province's official animal, the bighorn sheep. THE CANADIAN PRESS/AP-Craig Bihrle/North Dakota Game and Fish Department via AP, File
Alberta government knew bighorn sheep contaminated with coal mine selenium: scientist

Alberta government knew bighorn sheep contaminated with coal mine selenium: scientist

Most Read