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Spring 2016 Economic Forecast: Staying the course amid high risks
Economic growth in Europe is expected to remain modest as key trading partners’ performance has slowed and some of the thus far supportive factors start to wane. As a result, in its spring forecast of 3 May the Commission expects modest euro area GDP of 1.6% in 2016 and 1.8% in 2017 after 1.7% in 2015. GDP growth in the EU is expected to moderate from 2.0% last year to 1.8% in 2016 before reaching 1.9% in 2017. Very accommodative monetary policy has set the scene for a pick-up in investment by making access to funding easier and cheaper, and fiscal policy in the euro area is also expected to be supportive of growth this year. But although oil prices fell again in early 2016 and prolonged the boost to real disposable incomes, the strength of this support should gradually fade as the oil price rebounds. Similarly, although euro area exports are still benefiting somewhat from the euro’s past depreciation, the currency’s recent rise could make the euro area more susceptible to the effects of slower external growth.
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Growth in Europe is holding up despite a more difficult global environment. There are signs that policy efforts are gradually delivering more jobs and supporting investment. But we have much more to do to tackle inequality.
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Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs
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Investment Plan for Europe: EIF and Raiffeisen-Leasing Polska conclude agreement to support innovative businesses
The European Investment Fund (EIF) and Raiffeisen-Leasing Polska S.A. have signed an InnovFin and COSME agreements for SMEs that will benefit from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. The InnovFin agreement will enable Raiffeisen-Leasing Polska to provide leases to innovative companies in Poland over the next two years and is expected to generate a portfolio of PLN 150 million (approx. EUR 34 million) in bank loans. In addition, the COSME agreement will allow Raiffeisen-Leasing Polska to provide lease agreements to 5,000 small businesses across all sectors over the next two years. The EU support for Polish companies is expected to generate a portfolio of PLN 520 million (approx. EUR 128.4 million) in lease agreements. The EIF also signed several EFSI-backed new agreements on 29 May that will benefit very small, small and medium-sized businesses in Denmark, France, Portugal, Spain and Sweden.
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Economic Sentiment picks up in both the euro area and the EU
In April, after three consecutive months of decline, the Economic Sentiment Indicator (ESI) picked up in both the euro area (by 0.9 points to 103.9) and the EU (by 0.5 points to 105.1). The increase in euro area sentiment resulted from improvements in confidence among consumers and in all business sectors except retail trade, where confidence decreased slightly. Rises were important in services and construction, while confidence in industry and among consumers registered only small improvements. Amongst the largest euro area economies, the ESI rose markedly in Italy (+4.4) and the Netherlands (+1.9) and slightly in Germany (+0.4), while it decreased in France (-1.0) and Spain (-0.8). The more modest increase of the headline indicator for the EU (+0.5) was mainly due to the deterioration of sentiment in the largest non-euro area EU economy, the UK (-1.6). However, the ESI increased markedly in Poland (+1.6). While services, consumer and construction confidence improved in line with the euro area, EU industry confidence remained broadly stable. Further in line with euro area developments, EU confidence fell in the retail trade and financial services sectors.
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Vice-President Dombrovskis visits Italy and Belgium to discuss the European Semester and reforms underway
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, paid official visits to Italy on 28-29 April and to Belgium on 30 April to discuss the economic situation in the context of the European Semester of economic policy coordination, as well as the reforms underway in each country. In Italy, he met with Finance Minister Pier Carlo Padoan and participated in a joint hearing with Budget, Employment and European Committees of the Chamber of Deputies and the Italian Senate. He also met with social partners and held a discussion with experts on the future of EMU. Vice-President Dombrovskis commended Italy for its progress with structural reforms including reform of the labour market, education system and public administration, and said that Italy is doing slightly better than the EU average in terms of implementation of the country specific recommendations that are a part of the European Semester. Dombrovskis is travelling to Member States as part of the Commission’s outreach on the European Semester, which is based on the Commission’s Country Reports of February that assessed Member States’ fiscal, economic and social developments.
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Council approves EU-San Marino taxation agreement designed to jointly improve tax compliance
On 21 April, the Council approved the conclusion of an agreement with San Marino aimed at clamping down on tax evasion by private savers. The agreement extends the automatic exchange of information on financial accounts between the EU Member States and San Marino. It is intended to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid. The procedure, which is in line with the new OECD/G20 global standard for the automatic exchange of information, will allow tax administrations in both EU countries and in San Marino improved cross-border access to information on the financial accounts of each other’s residents. The agreement upgrades a 2004 agreement that ensured that San Marino applied measures equivalent to those in the amended EU Directive 2003/48/EC on the taxation of savings income. The new agreement was signed on 8 December 2015, when similar agreements were concluded with Liechtenstein and Switzerland.
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EU Candidate & Potential Candidate Countries’ Economic Quarterly (CCEQ) - 1st Quarter 2016
This paper provides an overview of economic developments in candidate and pre-candidate countries in the Western Balkans (Albania, the Former Yugoslav Republic of Macedonia, Montenegro, Serbia, Bosnia and Herzegovina, and Kosovo) and Turkey. The economic recovery in the Western Balkans strengthened during 2015 thanks to the emergence of a new investment cycle and, in some cases, a broadening of the recovery across more economic sectors. At the same time, private consumption remained somewhat subdued, reflecting, among others, stagnating wages and pensions and still weak consumer confidence. The region's export performance has gained some pace, but remained generally modest, despite the recovery in main EU trading partners. The recovery led to some job creation in the private sector, but unemployment rates remain stubbornly high. Despite some progress in fiscal consolidation, high and still growing public debt levels in most countries of the region remain a cause for concern.
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Spring 2016 Economic Forecast: Staying the course amid high risks |
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Directorate-General for Economic
and Financial Affairs
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