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EU economy tipped to pick up next year

EU economy tipped to pick up next year

The European Union's (EU) economy is expected to pick up next year, a new report has indicated.

According to estimates from the European Commission (EC), gross domestic product in the region will go up by 0.4 per cent, with the eurozone seeing growth of 0.1 per cent.

This will come after a 0.3 per cent contraction across the EU as a whole throughout 2012 and a 0.4 per cent slump in the euro area.

However, the EC acknowledged the short-term outlook for the region "remains fragile", particularly as unemployment rates are not expected to come down significantly any time soon.

Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro, commented: "Europe is going through a difficult process of macroeconomic rebalancing, which will still last for some time.

"Our projections point to a gradual improvement in Europe's growth outlook from early next year."

Mr Rehn stated that a number of major policy decisions in recent months have helped to boost confidence levels across the continent.

However, he stressed that while market jitters have eased slightly, policymakers across Europe cannot afford to be complacent.

Indeed, Mr Rehn said Europe must continue combining "sound fiscal policies with structural reforms to create the conditions for sustainable growth".

This, he said, would help to bring down the level of unemployment in the EU, which he described as "unacceptably high" at the moment.

According to the EC report, a number of internal and external imbalances had built up across Europe in the years leading up to the financial crisis.

It noted that while these are being reduced at the moment, the process of bringing this about is leading to a divergence in economic activity between member states.

The EC added that throughout the first ten years of the euro, some countries lost their competitiveness. However, the report said this is being "gradually restored", with many nations expecting to see an increase in export growth over the next few years.

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