European economies performed better than expected in 2006, growing by 3%, and should continue their recovery at roughly the same pace in 2007. With just a slight slowdown in 2008, growth should remain at 2.7%, according to figures published by the Commission on 7 May, ahead of a meeting of EU finance ministers.
These latest economic forecasts are an improvement on estimates made last autumn, as investment and household consumption rose more than expected, fuelled by solid world economic growth and a substantial drop in European unemployment (EurActiv 06/09/06).
The figures mean that, for the first time in years, the EU will be the fastest-growing economy in the developed world, with growth in the US and Japan falling to around 2.2% in 2007.
On the back of this recovery, the Commission predicts that another 5.5 million jobs will be created in 2007 and 2008, helping to bring unemployment levels down to 6.7% in 2008.
However, Economic and Financial Affairs Commissioner Joaquín Almunia warned member states that, faced with an ageing society, a slowdown in US growth and the threat of rising oil prices, they "cannot afford to make the same mistakes as in the previous growth cycle" – using the upturn as an excuse to stray from balancing their budgets.
"We must help sustain the economic recovery by putting public finances firmly on a sounder footing and by pursuing the reform process. This, in turn, will cut public debts and help increase the growth potential before the ageing problem starts kicking in," he said, pointing the finger at five member states – Portugal, the Czech Republic, Poland, Romania and Hungary – that are still failing to honour their commitment to reduce structural deficits to less than 3% of GDP.
