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European economic forecast – spring 2010: Gradual EU economic recovery in progress
The EU economy is expected to maintain a gradual recovery after emerging in the third quarter of 2009 from the deepest recession in its history, according to the European Commission’s spring forecast for 2010-11, published on 5 May. The Commission said the economy was set to grow by 1% in 2010 and by 1¾% in 2011 – an upward revision of a ¼-percentage point for this year compared to the Commission's autumn forecast. But it said the speed of the recovery was likely to increasingly vary across Member States, and, like other developed countries, the EU would have to grapple with the legacy of the crisis for some time to come, notably in terms of public debt levels.
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The improved outlook for economic growth this year is good news for Europe. We must now ensure that growth will not be derailed by risks related to financial stability.
European Commissioner for Economic and Monetary Affairs Olli Rehn |
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Better intra-euro-area adjustment mechanisms needed
On 3 May the Commission published a comprehensive assessment of competitiveness and current-account divergences within the euro area since 1999. The first decade of EMU saw euro-area Member States' competitiveness positions progressively diverge and large differences in current-account positions emerge. These already worrying trends have, to a large extent, been further exacerbated by the economic crisis. The situation is particularly pressing in Member States with high public debt, large current-account deficits and significant competitiveness losses, but a coordinated effort by both current-account deficit and current-account surplus countries would enable the euro area as a whole to adjust more smoothly. |
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Euro-area finance ministers agree to activate stability package of bilateral loans to Greece
Greece could receive, before 19 May, the first instalments of a euro-zone/IMF support package worth €110 billion after agreement was reached in Brussels on 2 May on a multi-annual programme of fiscal consolidation and structural reform and euro-zone finance ministers confirmed their readiness to provide loans to be pooled by the European Commission. The multi-annual adjustment programme, representing the policy conditions to be implemented by Greece, was negotiated with the Greek government by the Commission together with the IMF and the European Central Bank. Greece formally requested assistance in April. With parliamentary approval needed in some euro-zone countries prior to the release of the first tranche, President of the European Council Herman Van Rompuy announced that he would convene a euro-area summit on 7 May “in order to conclude the whole process and to draw the first conclusions of this crisis for the governance of the Euro area”. |
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Commission focuses on continued international economic recovery effort at IMF meetings
The European Commission joined world economic and financial leaders at the 23-25 April IMF-World Bank Spring Meetings in Washington DC as participants looked to reinforce the global economic recovery and pursue efforts to create a more stable international economic and financial system. There was consensus that the recovery had progressed better than previously anticipated, although at varying speeds. The Commission stressed the need to take rising sustainability concerns into account in country-specific exit strategies. G20 and IMF economic chiefs considered possible taxation of the financial sector to help carry the cost of financial repair, and consultations among major economies on their macroeconomic policies. There remains a strong consensus on the need to reform the financial system, but coordinating reforms is a challenge. |
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New economic guidelines proposed to frame the Europe 2020 strategy
On 27 April the Commission put forward a new, streamlined set of guidelines for economic policy-making (Broad Economic Policy Guidelines) for individual Member States and the EU as a whole which, together with the accompanying employment guidelines, will frame the Europe 2020 strategy to revitalise the EU's economy. They will apply up to 2014. They include recommendations to ensure high-quality, sustainable public finances; tackle imbalances, especially in the euro area; boost support for R&D and innovation; hone resource efficiency; improve the business environment and modernise the industrial base. The integrated guidelines will be scrutinised by the Council and European Parliament and should be adopted by EU heads of state or government at the European Council meeting in June. |
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Commission outlines steps to address economic impact of ash-cloud crisis
European Transport Commissioner Siim Kallas presented on 27 April a preliminary assessment of the economic consequences for the air transport industry of the recent volcanic ash cloud disruption, describing it as an “unprecedented crisis” thought to have cost the sector several hundreds of million euros. He set out, in association with Commissioners Almunia (competition & state aid) and Rehn (economic & monetary affairs), a range of possible immediate and structural measures to help the industry overcome the crisis and to improve structures for the longer term, stressing the need for European coordination. The proposals were discussed by EU Transport Ministers at an extraordinary Council meeting on 4 May in Brussels. |
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Euro-in-schools study scoops first IABC Gold Quill for a European Commission project
DG ECFIN’s recent collaboration with Gellis Communications to determine the best means to promote learning on the euro in European schools has been awarded a Gold Quill Award for Strategic Communication Processes from the International Association of Business Communicators (IABC). Often cited as the communication industry’s oldest and most prestigious award, this is the first time in the prize’s 35-year history that a Gold Quill has been awarded to the European Commission or indeed any of the European institutions. The exhaustive "Educational Study on the teaching of the euro and EMU at school" was used to build an evidence-based strategy and notably highlighted the need for further cooperation among Commission departments. |
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The EU's neighbouring economies: emerging from the global crisis, Occasional Paper 59
The EU's neighbouring economies face new challenges in the aftermath of the global crisis. This review analyses recent economic, monetary and financial developments as well as the impact of high fiscal debt stocks, sizeable government sectors, weak private sectors, high unemployment rates and shallow financial sectors, which threaten to hamper economic activity and damage welfare levels. The southern and eastern regions have seen very different income developments in recent decades, but all need far-reaching structural reforms to enhance potential growth and improve resilience.
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Upcoming: European Business Cycle Indicators, May 2010 |
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Upcoming: Study on the measurement of competition, Economic Paper 409 |
| Upcoming: Does capacity utilisation help estimating the TFP cycle, Economic Paper 410 |
| Upcoming: European Economy Research Letter, Vol. 4, Issue 1 |
| Upcoming: Labour Market Performance and Migration Flows in Arab Mediterranean Countries, Occasional Paper 60 |
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Directorate-General for Economic and Financial Affairs |
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