EU economic recovery has 'now taken hold'

European commission vice-president with responsibility for economic affairs Siim Kallas has announced that "all EU economies are expected to be growing again" by 2015.

By Des Hinton-Beales

05 May 2014

Kallas, who took charge of the commission's economic affairs portfolio after Olli Rehn stepped down due to electoral commitments, addressed a press conference in Brussels on Monday, where he said, "The recovery has now taken hold".

The Estonian official was presenting the commission's 2014 spring forecast, which predicts real GDP growth across the entire bloc this year of 1.6 per cent, with the EU's eurozone remaining steady at 1.2 per cent.

"In 2015, [EU and eurozone] growth is expected to accelerate to two percent and 1.7 per cent, respectively ," he added.

"Continued reform efforts by member states and the EU itself are paying off. Deficits have declined, investment is rebounding and, importantly, the employment situation has started improving" - Siim Kallas

"Since the EU economy came out of recession a year ago," said Kallas, "the economic outlook for the EU remains favourable. The recovery is gaining traction, including in the vulnerable countries".

He also stressed that, "While unemployment remains high in many member states, the labour market has stabilised and we expect some improvement in the next two years."

The forecast predicts a four percentage point drop in joblessness, down to 10.1 per cent, across the EU for 2014, with eurozone unemployment expected to fall by the same margin to 11.4 per cent.

The commissioner also emphasised that "since 2012 financial market conditions have been improving, particularly in equity and bond markets", adding that the forecast showed that "the fragmentation in lending markets should diminish, leading to improved conditions for small and medium enterprises".

However, despite the improving economic signs, Kallas said that "inflation is projected to remain at a low level for a prolonged period", with 2014 expected to show "consumer price inflation of 0.8 per cent in the euro area and… one per cent in the EU".

The commissioner also wanted to underline the "positive signs coming from Greece: The large amounts of private equity capital raised by Greek banks in recent weeks have exceeded market expectations and point to returning confidence".

This is not a recovery, this is wishful thinking" - Hannes Swoboda

Kallas' comments come as Portuguese prime minister Pedro Passos Coelho announced that his country is to make a "clean" exit from its three-year €78bn troika bailout, leaving Greece and Cyprus as the only eurozone countries receiving assistance.

"Continued reform efforts by member states and the EU itself are paying off," said Kallas, adding, "Deficits have declined, investment is rebounding and, importantly, the employment situation has started improving".

However, parliament's S&D group president Hannes Swoboda issued a press release as part of his 'Europe back to work - A 10 point plan for change' campaign that said, "Conservative elites are ignoring the unemployment crisis in Europe".

"In March 2014, EU unemployment was at 10.5 per cent, down only slightly from 2013's 10.9 per cent, and still above the rate of March 2012 (10.2 per cent), March 2011 (9.5 per cent), March 2010 (9.6 per cent) and March 2009 (8.3 per cent). This is not a recovery, this is wishful thinking," said the Austrian MEP.

"The conservative EU leadership have talked a lot, but done nothing to actually create job opportunities for Europeans. [Commission president José Manuel] Barroso and [former economic and monetary affairs commissioner Olli] Rehn have instead embarked on a distraction campaign, trying to talk down the catastrophe of unending high unemployment in the EU."

"We need to change Europe's economic and investment policy, it is as simple as that," he concluded.


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