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Rehn forecasts slow economic growth

Commission predicts growth of 1.9% in 2015, but unemployment to remain high.

Growth in the European Union will edge up in 2014 and 2015, but will bring only marginal reductions in unemployment, according to the European Commission’s latest economic forecasts.

The Commission’s autumn economic forecast, published today (5 November), predicted that the EU’s gross domestic product will grow by 1.9% in 2015, while the eurozone’s GDP will grow by 1.7%. This would represent only a relatively small increase on expected growth of 1.4% across the EU and 1.1% in the eurozone in 2014.

The predicted growth is not expected to create many jobs, with employment rates expected to increase by only 0.3% in 2014 and 0.7% in 2015 in the EU. The figures for the eurozone are similar.  As a result unemployment in the eurozone in 2015 is expected to fall marginally to 11.8% of the economically active population in the euro area and 10.7% in the EU.

“The fiscal consolidation and structural reforms undertaken in Europe have created the basis for recovery”, said Olli Rehn, the European commissioner for economic and monetary affairs and the euro. “But it is too early to declare victory: unemployment remains at unacceptably high levels.”

According to the autumn forecast, the EU’s economy will remain weak and uneven in the face of continued government austerity and a worsening global economy. While the EU’s financial markets have improved significantly, their continued fragmentation across member states means that loans remain expensive, stifling growth. But the autumn report credits recent EU policies of having abated perceived risks to the euro stemming from the sovereign debt crisis, marking an improvement on the winter and spring forecasts.