Europe’s Economy: Pale Spring Dawning
- May 25th, 2010
- Posted by EUEditor
Pressure on government borrowing, especially since the stimulus spending and bank bailouts last year in the financial crisis, has been qualified by more growth-orientated, yet cautious talk out of Brussels.
SPRINGTIME, THOUGH LOOKING A LITTLE PALE
A Spring forecast for the European Union economy (7.5.10) has predicted slow growth of 1% this year, and 1.75% in 2011, in the climb back out of recession.
The EU Commissioner for Economic and Monetary Affairs, Olli Rehn, said the improved outlook was good news but had to be backed up by the completion of the current financial changes in the financial area, such as the joint lending guarantees for member governments, and regulations imposed on hedge fund operators.
“We must now ensure that growth will not be derailed by risks related to financial stabilityâ€, he said.
While the growth forecasts had been revised upwards weak domestic demand continued to restrain the recovery, with varying performance expected across the different member states. Labour market conditions had shown some signs of stabilisation, with unemployment projected to peak this year at a lower level than forecast earlier – though still at close to 10% for the EU.
He said the temporary fiscal measures put in place during 2009-10 had been key in turning the EU economy around, but also added to the public deficit, set to rise to 7¼% of GDP in 2010, before falling back slightly in 2011.
Successful completion of the financial support to Greece could be expected to increase investor and consumer confidence.
FIGURES TELL THE STORY – JOBS AND FARM INCOMES
Figures released by the EU statistics agency, Eurostat, have outlined the employment impact of the global economic crisis, setting up a comparison with the hard-hit American labour market – both shown at more than 9.5% in the first quarter of this year.
Its summary:
“The unemployment rate in the European Union has risen sharply since the first quarter of 2008 as a result of the economic crisis. However, the increase has been much smaller than in the United States, where the rate has overtaken that of the EU despite having been much lower at the start of the crisis. Unemployment varies greatly across both Europe and the US. Recent data from the US Current Population Survey and from the European Labour Force Survey (LFS) (fourth quarter of 2009) are used to analyse unemployment in the two areas by gender, educational level and duration. ..â€
Incomes from agriculture have taken a tumble in step with the lift in unemployment, explaining and supporting claims of farmers this week out in the streets (including a take-over of the Champs Elysees – pictiure), objecting to the impacts of growing costs and weaker prices.
Eurostat reports: “Agricultural income per annual work unit (Indicator A1) fell by 11.6% in the EU in 2009, mainly caused by a drop in output prices. The result is based on estimates provided by the Member States in January 2010. The steep decrease in income followed a decrease of 1.8% in 2008…â€
INDUSTRIAL GROWTH
Stronger prospects were recorded in industrial production.
In March 2010 compared with February 2010, seasonally adjusted industrial production1 grew by 1.3% in the sixteen countries of the Euro area (EA16) and by 1.2% in the EU as a whole (EU27). In February3 production increased by 0.7% and 0.5% respectively. In March 2010 compared with March 2009, industrial production increased by 6.9% in the Euro area and by 6.0% in the EU27, said the Eurostat service, in a bulletin..
Reference
Eurostat, Brussels, Media Release, March 2010 compared with February 2010:Industrial production up by 1.3% in Euro area.
Kiiver H. and R. Hijman, Eurostat 20/2010: Polulation and Social Conditions, Eurostat, briussels, 11.5.10. Impact of the crisis on unemployment so far less pronounced in the EU than in the US – Issue number 20/2010. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home, (25.5.10).
O. Olsen, Eurostat 18/2010: Agriculture and Fisheries, Eurostat, Brussels, 7.5.10. EU Agricultural Income down 11.6% in 2009 – Issue number 18/2010. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home, (25.5.10).
European Commission, Brussels, “Spring forecast 2010-11: economic recovery in progress in the EUâ€, 7.5.10. http://www.delaus.ec.europa.eu/,(25.5.10).
Pictures Commondreams