On 22 February, the European Commission published its Winter Forecast 2012-2014 saying that by 2014 domestic demand is expected to take over as the main driver of strengthening EU GDP growth.
According to the Forecast, leading indicators suggest that EU’s GDP is now bottoming out and the Commission expects an acceleration of economic activity. Growth will initially be driven by exports, while domestic investment and consumption are expected to recover later in the year.
European Commissioner for Economic and Monetary Affairs Olli Rehn insisted that the policies of internal devaluation needed to continue, characterising them as a process for the “ongoing rebalancing of the European economy.” Mr. Rehn concluded, “we must stay the course of reform and avoid any loss of momentum, which could undermine the turnaround in confidence that is underway, delaying the needed upswing in growth and job creation.”
On the other hand, according to Bloomberg, Marco Buti head of the Commission’s economic department said in a statement that Europe’s labour market is a serious concern, as unemployment will climb to 12.2 per cent in 2013. “This has grave social consequences and will, if unemployment becomes structurally entrenched, also weigh on growth perspectives going forward,” Buti stressed.
Yesterday, European Commissioner responsible for Employment, Social Affairs and Inclusion László Andor participated in the Council of Europe Conference on “Poverty and Inequalities in Societies of Human Rights.” Mr. Andor stressed that almost 120 million people, one in four of the EU population is at risk of poverty or social exclusion. In addition he acknowledged that lack of social cohesion can damage democracy as it “corrodes the legitimacy of government and undermines the foundations of society.”
But,according to the Forecast, the sizeable fiscal measures that Member States are implementing should lead to another reduction of headline fiscal deficits to 3.4 per cent in the EU and 2.8 per cent in the Eurozone in 2013.