The economic outlook for both the eurozone and the EU as a whole is increasingly upbeat, says the European Commission. Although concerns remain, the crisis of recent years seems to be finally over.
The European Commission has raised its 2017 growth forecast for the eurozone and expects the 19-country bloc to grow by 2.2 percent this year — its fastest pace in a decade.
The Commission had previously forecast growth for the year of 1.7 percent, but its autumn economic outlook sharply revises the figure on the back of surprisingly strong GDP growth figures announced for the third quarter last month.
"After five years of moderate recovery, European growth has now accelerated," EU Economy Commissioner Pierre Moscovici said on Thursday.
While the overall outlook was positive, the EU executive's main areas of concern center on continuing geopolitical tensions between the US and North Korea, issues within the Chinese economy, particularly around protectionism, and of course, the outcome of the ongoing Brexit negotiations.
With the latter in mind, the European Commission revised its growth forecasts for the UK, cutting projected 2017 growth to 1.5 percent from 1.8 percent and forecasting a further slowing down in 2018 and 2019 respectively.
Rising global tide lifts European boats
Not since before the global financial crisis of 2007-2008 and the eurozone debt crisis that followed it has the outlook been so upbeat for the EU economy. Beyond 2017, the EC predicts eurozone and overall EU growth of 2.1 percent in 2018 and 1.9 percent in 2019.
"We see good news on many fronts, with more jobs being created, rising investment and strengthening public finances," said Moscovici, who also highlighted concerns over high debt levels and a lack of wage growth.
An improved global economic tide has raised European boats, as has the surge of optimism that followed the election of the reformist Emmanuel Macron as French president in May.
Macron is currently pushing through significant labor reforms in France and hopes around those reforms, combined with his repeated calls for enhanced European economic cooperation and consolidation, have helped push growth expectations for France for 2017 up to 1.6 percent from the earlier 1.4 percent.
The EC forecast did not mention the Catalonian crisis and actually raised growth forecasts for Spain up to a healthy 3.1 percent for 2017.
Trouble in the Kingdom
Unsurprisingly, the EC's outlook for the UK is not especially optimistic. With the growth forecast for 2017 slashed by 0.3 percent, it also expects the UK economy to only grow marginally over the next two years — by 1.3 percent in 2018 and by 1.1 percent in 2019, the year Brexit is currently scheduled to happen.
The European Commission forecasts are slightly more pessimistic than other forecasts for the UK, but given that so far this year, the UK grew by 0.3 percent in both the first and second quarters, and by 0.4 percent in the third quarter, they don't seem unduly downbeat.
The official press release from the commission drily noted: "Given the ongoing negotiation on the terms of the UK withdrawal from the EU, our projections for 2019 are based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK."
The news comes on the same day as a senior EU diplomat said the UK needed to settle its much discussed 'divorce bill' with the EU within the next three weeks. The sixth round of Brexit negotiations takes place on Thursday and Friday.
Light at the end of the tunnel?
Last month the European Central Bank (ECB) said it was starting to wind down the massive bond-buying stimulus program it had driven over the last number of years to help steer the eurozone out of the debt crisis it found itself in.
With overall EU growth now slated at 2.3 percent for 2017, followed by 2.1 percent, the worst appears to be long over.
With that in mind, the figures for Greece — the European country most profoundly affected by the crisis — are encouraging. The EC has forecast growth of 1.6 percent for Greece this year, with rates of 2.5 percent expected in both 2018 and 2019.
"Greece for certain has emerged from crisis, Greece has crossed the rubicon of crisis,” Greek Prime Minister Alexis Tsipras told the EU-Arab world summit in Athens on Thursday.