The April 2011 issue of the Quarterly Report focuses on the EU's economic policy response to the crisis since its outbreak in 2008, placing a particular emphasis on the comprehensive package of policy measures agreed by the European Council in March 2011. The Council's decision to establish a permanent crisis resolution mechanism in the form of the European Stability Mechanism and the sealing of the Euro Plus Pact complement prior policy action spanning the entire economic, budgetary and financial sphere. A second focus section examines the recent upward drift in euro area inflation, stressing the importance of cyclical, but also of structural and political explanatory factors. The acceleration of inflation is found to be mainly driven by commodities prices, especially oil, whereas underlying price pressures remain subdued due to the large amount of spare capacity and well-anchored expectations.

The Report also assesses the macroeconomic impact of higher capital requirements for banks under a move to Basel III regulations, finding that GDP would be lowered slightly over the medium term, but would also be less volatile. A further topic reviews Estonia's path towards the adoption of the euro and emphasises the role of sound economic policymaking in having achieved this goal. A final contribution assesses the ongoing recovery through the lens of the Commission's European Business and Consumer Survey data, which show that the recovery remains on track but is characterised by unusually sluggish and rather unbalanced growth.

Press release 7/4/2011. IP11/449. Inflation in the euro area has picked up, but underlying price pressures remain subdued