Representation in United Kingdom

EC forecasts resilient growth for the EU economy amid increased uncertainty

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Press conference by Pierre Moscovici
Press conference by Pierre Moscovici

Growth is set to remain strong in 2018 and 2019 at 2.1% and 2% respectively in both the EU and the euro area, estimates the European Commission in its Summer 2018 Interim Economic Forecast released today. For the UK economy the outlook remains subdued.

12/07/2018

After five consecutive quarters of vigorous expansion, the economic momentum moderated in the first half of 2018 and is now set to be 0.2 percentage points lower than the spring forecast in both the EU and the euro area.

The fundamental conditions for sustained economic growth in the EU and the euro area remain in place. The moderation in growth rates is partly the result of temporary factors, but rising trade tensions, higher oil prices and political uncertainty in some Member States may also have played a role.

Growth momentum is expected to strengthen somewhat in the second half of this year, as labour market conditions improve, household debt declines, consumer confidence remains high and monetary policy remains supportive.

For the UK modest GDP growth of 1.3% is forecast in 2018. Private consumption growth is expected to remain subdued despite support from generally easing inflation, reflecting low consumer confidence and an anticipated stabilisation in the household saving rate.

GDP growth is projected to remain weak at 1.2% in 2019. Business investment is expected to remain subdued following a period of prolonged uncertainty. Export growth is forecast to remain modest, broadly in line with growth in export markets.

Given the ongoing negotiations on the terms of the UK withdrawal from the EU, the EC projections for 2019 are based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK. This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process.

Full press release and quotes

Detailed UK Forecast

Summer 2018 Interim Economic Forecast

European Economic Forecasts – explanatory website