Europe is finally leaving behind the threat of recession

the war unleashed fears of economic recession in Europe, due to the historic rise in energy prices and its correlate in the form of inflation, which only began to be ruled out at the end of last year.

Then it was thought that the European bloc would have a 2023 of almost stagnation before starting to grow slightly in 2024.

But as always after the outbreak of the pandemic in 2020 the data is better than expected and the European Commission is forced to do it again raise your predictions of growth. Brussels continues to warn of downside risks but already confirms the possibility of falling into recession he is lagging behind

The new predictions

The European Commission, the executive arm of the European Union, released its spring economic forecast on Monday.

The data improve compared to the latest complete forecasts, published almost six months ago (very limited ones with very little data are published at the end of January). The improvement is due to lower energy prices, fewer disruptions in global supply chains and a much better-than-expected labor market.

“This start to the year is better than expected” (reads the press release of the European Executive) growth forecasts increase for this year to 1.0% (the last one was 0.8%) and to 1.7% in 2024. The forecast grows the same for the 20 countries that share the common European currency, the euro, as for the other seven in the bloc who keep their national currencies.

THE inflation forecastswhich exceeded 10% just under a year ago, they go down again. This year it is expected to close at an average of 5.8% in the European Union and in 2024 will close at 2.8%just eight tenths of the European Central Bank’s 2.0% target over its mandate.

Above all, the data show that “the European economy has succeeded contain the negative impact of war of Russian aggression against Ukraine and was able to overcome the energy crisis thanks to rapid diversification of supplies and a significant drop in gas consumption (over 17% at the continental level between August 2022 and March 2023)”.

This growth has not even been held back by the interest rate increases that the European Central Bank has been applying for almost a year to contain inflation and which have brought the reference rate from 0.0% to 3.75%. And despite the fact that inflation eats up part of household income because wage increases are still below the inflation rate.

THE four major European economies (Germany, France, Italy and Spain) save the recession, but their data is very different. Germany will grow this year by 0.2% and in 2024 by 1.4%. France 0.7% and 1.4%. Italy 1.2% and 1.1% and Spain will lead this growth with 1.9% and 2.0%.

the four economies keep inflation below 3% in 2024: Germany and Spain 2.7%, Italy 2.9% and France 2.5%. But not everyone leaves the public deficit in 2024 below the 3% they must follow as a guide to comply with European fiscal rules. The Spanish tax red will be 3.3% within a year and a half, the Italian one 3.7% and the French one 4.3%. Only Germany reaches 1.2%.

Also the four reduce public debt, but as in other data, the almost invisible decline of France (from 109.6% of GDP to 109.5%) contrasts with that of Germany (cut by 1.1 points) or that of Spain, which cut by 1 ,5 points. Among the large European countries, Italy will continue to be the leader in public debt with 140.3% of GDP at the end of 2024.

Brussels, especially for clarion

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