Economic forecast: signs of recovery in the EU but unemployment “unacceptably high”

Average jobless in the EU is given at 10.7% in 2015, but for Italy it is 12.1%

Rhen: “Balancing the budget and reforms created conditions for recovery”

All things considered this report card, released by the European Commission today is positive.  Examination of accounts and the economic situation of EU member states demonstrates “more and more positive signs” indicating that “the European economy has reached a turning point” declared Olli Rehn, presenting the autumn forecast to the Executives in Brussels. For the Vice President and Commissioner of Economic and Monetary Affairs, “fiscal consolidation and structural reforms implemented in Europe have created conditions for recovery but it is too early to declare victory because unemployment remains at unacceptably high levels.”

UNEMPLOYMENT AND GROWTH – This year unemployment rates have remained very high in some countries and employment registered a further decrease. In the last months, in any case, conditions in the labor market started to stabilize and the Commission expects a slight decline in unemployment, which could reach 10.7% in the EU and 11.8% in the Euro zone by 2015 although the disparity between various countries remains very high. In Italy the average forecasted is higher at 12.4% next year and 12.1% in 2015.

Some encouraging signs are seen though regarding growth. In the EU a gradual acceleration is expected in 2014 that should be equal to 1.4% in the EU and 1.1% in the Euro zone and then respectively reaching 1.9% and 1.7% in 2015. “The economy in Spain and Italy will drop this year but for Spain it will return in the third trimester and in the fourth for Italy” announced Rehn, who warned: “Both countries need many adjustments.”

 DEFICIT AND DEBT – Good news, most of all for our country, in the chapter of reducing public deficits. In 2013 the nominal deficit should go down to 3.5% of GDP in the EU and to 3% in the Euro zone. According to the 2014 draft financial statements received by the Commission before the date of final drafting of the forecast, this improvement should continue in 2014, even if at a steadier pace. The projected deficit-to-GDP ratio regarding Italy is optimistic: 3% in 2013, 2.7% in 2014 and 2.5% in 2015. But even on this note the Vice President wanted to emphasize that “these are forecasts” which are based on “budget and austerity measures” put in place this term, and taking into account the fact that “at the end of the year taxes are levied” and of the fact that “there are measures to be adopted.” Rehn seemed to be confident because “the absorption the government assumed has been confirmed many times.”

 FAITH IN ITALY – “Italian authorities will certainly ensure expenditures will be funded in a credible way” said Rehn, adding that “we must equip the safeguard clause in order to not exceed the 3% threshold.” The exams are not over here though; the Vice President announced that “next week the Commission will present the evaluation of the economic and fiscal policies for Italy and other member states.” Another benchmark for Letta’s government.

Alfonso Bianchi