The European economies are slowly gaining traction but the recovery
is both lopsided and so tepid that the unemployment rate will remain
stuck at double-digit levels for a long time.
The European Commission, the executive arm of the European Union, on Tuesday forecast growth in the 28-county EU at 1.5 per cent this year and 2 per cent in 2015. But growth in the 18 euro zone countries, many of which are weighed down by high debt and lingering austerity, is forecast at only 1.2 per cent this year, up marginally from 1.1 per cent in the previous forecast, and 1.8 per cent next year.
The forecasts for the EU and the euro zone, which are updated three times a year, show that the recovery is still patchy. Among the larger EU economies, Britain and Germany are the stars.
Britain’s growth is now forecast at 2.5 per cent this year, up from November’s 2.2 per cent forecast, and 2.4 per cent in 2015. That should be strong enough to push down the British jobless rate to 6.8 per cent by the end of the year, a dream figure for most of the euro zone countries, where the overall jobless rate was 12.1 per cent last year. Germany is set to grow at 1.8 per cent this year and 2 per cent in 2015.
The standout laggard is Italy, whose barely perceptible recovery is actually going in reverse, putting huge pressure on new prime minister Matteo Renzi.
Mr. Renzi, 39, the youngest prime minister in the history of the republic, has called the Italian economy a “swamp.” But emerging from it will become all the more difficult as the wider European recovery leaves Italy behind.
Growth in the euro zone’s third-largest economy will be 0.6 per cent this year, down from the 0.7 per cent forecast made in November. Italy is technically out of recession – it grew by 0.1 per cent in the fourth quarter – but growth is being hindered by lack of productivity gains, stalled economic reform, high public debt and endless political turmoil. Mr. Renzi is the third prime minister – none of them elected – in two years.
Read more: EU’s brighter economic picture dulled by Italy, France - The Globe and Mail
The European Commission, the executive arm of the European Union, on Tuesday forecast growth in the 28-county EU at 1.5 per cent this year and 2 per cent in 2015. But growth in the 18 euro zone countries, many of which are weighed down by high debt and lingering austerity, is forecast at only 1.2 per cent this year, up marginally from 1.1 per cent in the previous forecast, and 1.8 per cent next year.
The forecasts for the EU and the euro zone, which are updated three times a year, show that the recovery is still patchy. Among the larger EU economies, Britain and Germany are the stars.
Britain’s growth is now forecast at 2.5 per cent this year, up from November’s 2.2 per cent forecast, and 2.4 per cent in 2015. That should be strong enough to push down the British jobless rate to 6.8 per cent by the end of the year, a dream figure for most of the euro zone countries, where the overall jobless rate was 12.1 per cent last year. Germany is set to grow at 1.8 per cent this year and 2 per cent in 2015.
The standout laggard is Italy, whose barely perceptible recovery is actually going in reverse, putting huge pressure on new prime minister Matteo Renzi.
Mr. Renzi, 39, the youngest prime minister in the history of the republic, has called the Italian economy a “swamp.” But emerging from it will become all the more difficult as the wider European recovery leaves Italy behind.
Growth in the euro zone’s third-largest economy will be 0.6 per cent this year, down from the 0.7 per cent forecast made in November. Italy is technically out of recession – it grew by 0.1 per cent in the fourth quarter – but growth is being hindered by lack of productivity gains, stalled economic reform, high public debt and endless political turmoil. Mr. Renzi is the third prime minister – none of them elected – in two years.
Read more: EU’s brighter economic picture dulled by Italy, France - The Globe and Mail
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