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European Commission Economic and Financial Affairs
E-NEWS - Issue 150
In this issue - 02 February 2017

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Image from the Economic and Financial Affairs Council press conference 27/01/2017 © European Union, 2017
EU finance ministers welcome conclusions of 2017 Alert Mechanism Report and Annual Growth Survey

Meeting on 26-27 January, EU finance ministers welcomed the Commission's sixth Alert Mechanism Report (AMR), as well as the Annual Growth Survey (AGS) 2017. The AMR marks the starting point of the annual round of the Macroeconomic Imbalance Procedure, while the AGS, which sets out broad policy priorities for jobs and growth in the EU and its Member States, marks the starting point of the 2017 European semester. Ministers broadly shared the Commission’s AMR analysis. They welcomed the progress made by Member States in correcting their imbalances, but noted that further action is needed to address savings and investment imbalances, as well as elevated levels of indebtedness. The Commission will conduct in-depth reviews of recent developments in the 13 Member States where imbalances were identified last year in order to assess whether the imbalances are unwinding, persisting or aggravating. Ministers also broadly agreed with the Commission’s analysis in the AGS. They noted that structural and fiscal policies should help consolidate the recovery while tackling macroeconomic imbalances. Both economic performance and reform implementation remain uneven across the EU, however. Against this background, ministers agreed on the broad policy priority areas outlined by the Commission: boosting investment, pursuing structural reforms and implementing responsible fiscal policies. They also proposed placing a higher priority on product market reforms since these provide a more direct boost to productivity and output regardless of economic conditions.

See also : The European Semester
More News
Image from the Investment plan webpage © European Union, 2014
Investment Plan for Europe: EUR 18 million for innovative SMEs in Latvia, Lithuania and Estonia, EUR 70 million for SAICA factory

The European Investment Fund (EIF) and Komerční banka signed an InnovFin SME guarantee agreement on 30 January to provide a EUR 200 million in loans to SMEs and small mid-caps in the Czech Republic. On 25 January, the EIF also signed an InnovFin SME guarantee agreement with UniCredit Leasing  to enhance access to finance for innovative SMEs in Latvia, Lithuania and Estonia. The agreement is expected to generate a loan portfolio of EUR 18 million over the next two years. This transaction benefits from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. Meanwhile, the European Investment Bank (EIB) signed a EUR 70 million agreement with SAICA. The EIB will finance SAICA's investment in new technologies to improve two of the production lines at its factory producing paper for corrugated cardboard in El Burgo de Ebro, Zaragoza. The aim of the loan is to help the company to implement new sustainable production processes geared towards the circular economy.

See also : Investment Plan
Image from the Real Economy episode 2017/01/31 © Euronews
Real Economy episode looks at how to increase investment in Europe

In the latest edition of Real Economy, Euronews looks at the kind of investments Europe needs. While investment levels have improved compared with levels seen during the economic crisis, forecasts until 2018 show that they are stagnating and in some cases, actually below pre-crisis levels. Investment is hampered by a complex set of barriers that range from regulation, to market size to political uncertainty. The European Fund for Strategic Investments (EFSI) is a tool to fill Europe’s 500-billion euro investment gap. In the 18 months since it kicked off, EFSI has approved hundreds of infrastructure projects and SME agreements across Europe, and raised EUR 30.2 billion of financing, which is expected to trigger EUR 164 billion in investment. Moreover, EFSI 2.0 will increase the EU guarantee by EUR 10 billion and raise the European Investment Bank’s (EIB) capital used for EFSI projects by EUR 2.5 billion, meaning that EFSI will have a base of 33.5 billion, raising the target of investments to EUR 500 billion. Werner Hoyer, President of the European Investment Bank, cites a lack of confidence as the major reason that investment is still insufficient. He also believes that access to finance is a problem on the continent – where 80% of financing for SMEs and for corporates goes through banks rather than through capital markets. According to Hoyer, the public sector needs to step in to get the investment engine going again.

See also : Is Europe in the mood to invest in itself?
ECFIN eNews readers survey © European Union, 2017
ECFIN E-news reader survey: What do you think of it?

The EU economic and financial landscape – and economic governance – continues to evolve in 2017. ECFIN E-news aims to summarise for you the latest key developments and invites you to read further on the topics you find most interesting. We would like to kindly ask you to let us know your views and suggestions. What do you like about the newsletter? What could be improved? Thank you for sharing your thoughts by spending just a few minutes to answer the online questionnaire. The survey will be open from issue 150 until issue 153, but please take a moment now to participate. We appreciate your feedback.

See also : ECFIN E-news reader survey: What do you think of it?
Inflation © iStockphoto
Euro area annual inflation up to 1.8%

Euro area annual inflation is expected to be 1.8% in January 2017, up from 1.1% in December 2016, according to a flash estimate from Eurostat, the statistical office of the EU. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in January (8.1%, compared with 2.6% in December), followed by food, alcohol & tobacco (1.7%, compared with 1.2% in December), services (1.2%, compared with 1.3% in December) and non-energy industrial goods (0.5%, compared with 0.3% in December).

See also : Euro area annual inflation up to 1.8%
Computer job key © iStockphoto
Euro area unemployment at 9.6%, EU at 8.2%

According to figures published on 31 January by Eurostat, the statistical office of the EU, the euro area seasonally-adjusted unemployment rate was 9.6% in December 2016, down from 9.7% in November 2016 and down from 10.5% in December 2015. This is the lowest rate recorded in the euro area since May 2009. The EU unemployment rate was 8.2% in December 2016, stable compared to November 2016 and down from 9.0% in December 2015. This remains the lowest rate recorded in the EU since February 2009. Compared with November 2016, the number of persons unemployed decreased by 159 000 in the EU and by 121 000 in the euro area. Compared with December 2015, unemployment fell by 1.839 million in the EU and by 1.256 million in the euro area. Among the Member States, the lowest unemployment rates in December 2016 were recorded in the Czech Republic (3.5%) and Germany (3.9%). The highest unemployment rates were observed in Greece (23.0% in October 2016) and Spain (18.4%). Compared with a year ago, the unemployment rate in December 2016 fell in twenty-four Member States, while it increased in Cyprus (from 13.1% to 14.3%), Italy (from 11.6% to 12.0%), Estonia (from 6.6% to 6.7% between November 2015 and November 2016) and Denmark (from 6.1% to 6.2%). The largest decreases were registered in Croatia (from 15.0% to 11.4%), Spain (from 20.7% to 18.4%) and Portugal (from 12.2% to 10.2%).

See also : Euro area unemployment at 9.6%
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union.

“What is important is that there is increased national ownership and implementation of reforms.”

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue © European Union
Graph of the Week
Pension reforms

Pension reforms in the EU

Selected Speeches
27 January 2017
Vice-President Valdis Dombrovskis. Remarks at the ECOFIN Council press conference. Speech 17/133 of 27 January.
26 January 2017
Commissioner Pierre Moscovici. Introductory remarks at the Eurogroup press conference. Speech 17/156 of 26 January.
23 January 2017
Vice-President Valdis Dombrovskis. Conference on the European Pillar of Social Rights Speech 17/133 of 23 January.

Save the date: Brussels Economic Forum – 1 June.

Public consultation on the Capital Markets Union mid-term review. Deadline 17 March.

Ex-post evaluation of macro-financial assistance to Ukraine.

Ex-post evaluation of macro-financial assistance to Jordan.
3 February
Informal meeting of the 27 Heads of State or Government
13-16 February
European Parliament Plenary
13 February
EU Economic forecasts, winter 2017
9-10 March
European Council
13-16 March
European Parliament Plenary
15-18 March
G20 Deputies and Ministerial meeting
20-21 February
9 March
ECB Governing Council meeting Frankfurt
20-21 March
3-6 April
European Parliament Plenary
21-23 April
Washington, D.C.
World Bank Group / IMF 2017 spring meetings
27 April
ECB Governing Council meeting Frankfurt
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