Representation in United Kingdom

EC forecasts a challenging road ahead for the EU economy

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Pierre Moscovici, Member of the EC in charge of Economic and Financial Affairs, Taxation and Customs
Pierre Moscovici, Member of the EC in charge of Economic and Financial Affairs, Taxation and Customs

For the EU economy as a whole, GDP is forecast to rise by 1.4% in 2019, 2020 and 2021. The forecast for 2020 was revised down compared to the summer (from 1.6%). UK GDP is expected to grow at a broadly stable pace at 1.3% in 2019, and at 1.4% in 2020 and 2021, according to the European Commission’s Autumn 2019 Economic Forecast published today. 

07/11/2019

The European economy is now in its seventh consecutive year of growth and is forecast to continue expanding in 2020 and 2021. Labour markets remain strong and unemployment continues to fall. However, the external environment has become much less supportive and uncertainty is running high. This is particularly affecting the manufacturing sector, which is also experiencing structural shifts. As a result, the European economy looks to be heading towards a protracted period of more subdued growth and muted inflation.

Although volatile, underlying UK GDP growth remains resilient but modest and is forecast to grow at a broadly stable pace over the forecast horizon. Private consumption should find support from real wage growth but continuing uncertainty about the UK’s future trading relationship with the EU means that business investment is likely to remain subdued. Net trade is expected to remain a drag on growth as external demand remains weak. Employment growth is expected to slow somewhat but unemployment should remain low. Inflation is projected to ease this year then rise gradually. Detailed forecast for the UK can be found here.

Given the ongoing ratification process of the revised Withdrawal Agreement and the uncertainty on future economic relations between the EU and the UK, projections are based on a purely technical assumption of status quo in terms of trading relations between the EU and the UK. This is for forecasting purposes only and has no bearing on future negotiations between the EU and the UK.

Full press release and quotes

Detailed UK Forecast

Autumn 2019 Economic Forecast

European Economic Forecast – explanatory website