Brussels predicts: the European economy will finally grow again next year

This article was last updated on November 15, 2024

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Brussels predicts: the European economy will finally grow again next year

After a long period of contraction, the European Union economy will grow again next year, the European Commission believes. According to forecasts, gross domestic product in the EU will grow by 1.5 percent next year and by 1.6 percent in 2026.

An important cause is the European unemployment rate, which has never been as low as it is now. By the end of this year, eight million more people in Europe will have a job than before the corona outbreak.

European Commissioner Gentiloni of Economic Affairs speaks of a remarkably strong increase in employment. Women, older workers and migrant workers in particular have benefited from this, he says.

Productivity falters

In October, 5.9 percent of the European working population was unemployed. This is the lowest figure since Brussels collected the figures from member states. The forecast is that employment will grow less rapidly in the future; next year by 0.8 percent and in 2026 by 0.5 percent.

The European Commission’s six-monthly forecast is not all rosy. In Europe, productivity, for example how much a worker produces in an hour of work, will stagnate this year. This was followed by a slight recovery in the following years. “Yet it will remain subdued until 2026,” the European Commission predicts.

Donald Trump

European Commissioner Gentiloni realizes that policymakers in the United States are viewing the European forecasts with curiosity. One of the biggest risks for the European economy is protectionism, he pointed to statements by the incoming American president Trump.

“If America goes down the path of protectionism, it will have very damaging consequences for the US and the EU,” Gentiloni said. However, he emphasized that the European Commission is determined to maintain good and close economic ties with the US.

Ukraine

Another major risk to the European economy is the war between Russia and Ukraine. Despite labor shortages and attacks on power plants, the Ukrainian economy continues to perform remarkably well. This year the country’s economy will grow by 3.5 percent and next year by 2.8 percent, Brussels predicts.

This is partly because Ukrainian exports have picked up again, as has household consumption. High government expenditure on defense also plays a role.