The European Commission publishes comprehensive macroeconomic forecasts twice-yearly in the spring and autumn. In this economic forecast published on 10 November 2011, the European Commission presents its assessment of the economic prospects for the EU and the euro area at the aggregate level. It also analyses developments in all individual Member States, as well as Candidate Countries and the economies of the US, Japan, China, Russia and the EFTA. A special chapter is dedicated to developments in EU labour markets.

Since the last fully-fledged forecast in May 2011, the outlook for the EU and the euro area has deteriorated. The protracted sovereign-debt crisis has taken its toll on confidence affecting investment and consumption. A worsening external economic environment has stalled exports, and the necessary fiscal consolidation is simultaneously restraining domestic demand.

These trends are expected to hold for several quarters, tilting growth prospects as well as the outlook for labour market developments to the downside. The first signs of improvements for GDP are projected for the second half of 2012; however, this recovery is expected to have a very limited impact on job creation.

Over the forecast period, inflation is projected to return to below 2%. Under the no-policy-change assumption, government deficits are set to decline to just above 3% of GDP by 2013.