The new Spring Economic Forecast, which was presented by Pierre Moscovici, Commissioner for Economic and Financial Affairs, this week, once again shows that the European economy, eight years after the outbreak of the crisis, has not been making any headway. In spite of a slight in-crease in growth, the situation on the labour market and the income situation of low earning households remain difficult.

The new Spring Economic Forecast, which was presented by Pierre Moscovici, Commissioner for Economic and Financial Affairs, this week, once again shows that the European economy, eight years after the outbreak of the crisis, has not been making any headway. In spite of a slight increase in growth, the situation on the labour market and the income situation of low earning households remain difficult.

The data, published by the Commission illustrates that the GDP growth rate shows a moderate increase – from 2.0 percent in 2015 up to 1.8 percent this year and a further slight rise to 1.9 percent in 2017. Whilst the low oil price, the low exchange rate of the euro, the relaxed monetary policy of the ECB and increased public spending have a positive impact on growth, the situation remains fragile, as emerging economies push down global growth. The main factor for the moderate development is the domestic demand within the EU and will remain so in the coming year. Thereby, according to the Commission, private consumption benefits from the improved situation on the labour market and disposable income of households, which due to low inflation has increased (however, it should be reduced again in 2017 as an increased price level is to be expected). Apart from that, this upward trend is pushed down by constantly increasing income inequality (see diagram), whereby low-wage earners least of all benefit from growth, on the one hand and by reluctant investments due to the great uncertainty concerning the future development of the global economic situation on the other.

http://ec.europa.eu/economy_finance/eu/forecasts/2016_spring/spring_forecast_2016_ppt_en.pdf

The situation on the labour market continues to remain difficult. Whilst this year and next employment will increase by 1 %; at 9.9 % in 2017, the unemployment rate will remain at a very high level. In particular Greece, Spain and Portugal, which due to austerity policy had to implement hard cuts across all sections, continue to show double-digit unemployment rates.

Furter Information:

Commission – Growth Report (available only in English)

Press release

EU economy: things are looking up again! Right?