Notwithstanding yesterday’s piece about burgeoning factory orders (and remember that everything is relative), the European Commission has sounded a note of cautious optimism that the worst is behind us. The Commission believes that the Eurozone economy has reached a “turning point” and that “signs of hope” had morphed into “tangible positive outcomes” – Sir Humphrey Appleby of Yes Minister! Fame could hardly have put it better.
Even the Commission’s faint praise of the Eurozone’s partially restored fortune was tempered by a downgrade to the growth projection for 2014. Initial projections were predicting that the economy of the 17 member bloc (which will become an 18 member bloc on New Year’s Day when Latvia joins the single currency) would grow by 1.4%. In May, this figure was trimmed back to 1.2% and the current projection is calling for an anaemic growth of 1.1% for the bloc. The economic output of the bloc has fallen for the past two years and, at least, it has now exited recession and returned to some form of growth. The Commission expects the Eurozone to expand by a modest 1.7% (again, off a low base) in 2015. For the wider EU (including the UK economy, of course) it thinks growth will be 1.4% in 2014 and 1.9% in 2015.
The Commission was sanguine about the prospects for employment, expecting it to hover about its current level of 11.1% this year. European Commissioner for Economic and Monetary Affairs, Olli Rehn cautioned: "It is too early to declare victory: unemployment remains at unacceptably high levels." The Commission believes that unemployment within the Eurozone will remain at its current 12.2% next year, although there may be some easing in the high unemployment countries caught up in the sovereign debt crisis: Ireland, Greece and Spain. The Commission thinks that Eurozone unemployment will decline marginally to 11.8% in 2015.