The Spring 2007 Economic Outlook for the European Union published by BusinessEurope forecasts 2.5% economic growth throughout the EU during 2007 and 2008. At the same time, the report predicts, employment growth will be 1.2-1.3% per year, bringing unemployment down to 7.0% in 2008. Hourly wages are predicted to grow by 3% per year.
The European Growth and Jobs Monitor, jointly published by Allianz Dresdner Economic Research and the 'Lisbon Council' Think-Tank, reaches equally optimistic conclusions: "Europe has finally turned the corner after years of disappointing performance. The Lisbon targets have come within closer reach than many had predicted." The reasons, the report states, are "the recent acceleration in labour productivity growth", which may be the "driven chiefly by the economic cycle", but is more likely to be induced by "structural improvements".
The report points out that "notwithstanding lacklustre economic activity between 2001 and 2005, more than 10 million jobs have been created in the EU-15 since the launch of the Lisbon Agenda" and sees "employment rates on a rising trend, even if they are unlikely to be fully on target by 2010". It goes on to say that "this achievement would not have been possible without the rather moderate development in labour costs and greater flexibility on the job market".
At the same time, citizens seem to have much less trust in an economic recovery that will affect them any time soon. A Special Eurobarometer 'European social reality' finds that only 41% of Europeans believe that their personal situation will improve over the next five years. For people aged over 55 and those who ended their education before the age of 15, the percentages of those who are optimistic are as low as 16 and 24% respectively. Among the same groups of the population, 34% find that their situation has deteriorated over the past five years.
The report shows a clear correlation between bad experiences in the past and negative expectations for the future. The matters of greatest concern to EU citizens are unemployment, the cost of living and pensions. One third of Europeans expect their employment and economic situations to become worse over the next twelve-month period.
In a consultation paper for the Commission, Roger Liddle and Frederic Lerais from the bureau of European policy advisers (the Commission's 'in-house think-tank') state: "The statistics show that Europe has a serious poverty problem. In all, 72 million EU-25 citizens - 15% - are at risk of poverty, with another 36 million on the verge of that risk."
They add: "Poor children experience a disproportionate share of deprivation, disadvantage, bad health and bad school outcomes. When they grow up, they are more likely to become unemployed, to get low-paid jobs, to live in social housing, to get in trouble with the police, and are at a greater risk of alcohol and drug abuse as young adults. Moreover, in most countries, they are likely to transfer their poverty of opportunities to their own children. This has an economic, social and political cost which in a rational world should be set against the public expenditure costs of early interventions (assuming such interventions can be made effective) to reduce the risks of future negative outcomes and social exclusion."
