The EU admits there is “persistent uncertainty” stemming from Russia’s ongoing invasion of Ukraine. But it also says that the European economy “continues to show resilience in a challenging global context.”
Lower energy prices, abating supply constraints and a strong labour market supported moderate growth in the first quarter of 2023, it announced.
This, adds the Commission, has dispelled fears of a recession. The “better-than-expected” start to the year lifts the growth outlook for the EU economy to 1.0% in 2023 and 1.7% in 2024.
Inflation has also been revised upwards, to 5.8% in 2023 and 2.8% in 2024, in the euro area.
In a statement, the EC said, “The European economy has managed to contain the adverse impact of Russia’s war of aggression against Ukraine, weathering the energy crisis thanks to a rapid diversification of supply and a sizeable fall in gas consumption.”
Markedly lower energy prices are working their way through the economy, reducing firms’ production costs. Consumers are also seeing their energy bills fall, although private consumption is set to remain subdued as wage growth lags inflation.
A record-strong labour market also seems to be bolstering the resilience of the EU economy.
The EU unemployment rate hit a new record low of 6.0% in March 2023, and participation and employment rates are at record highs, according to the EC.
The forecast publication includes, for the first time, an overview of the economic structural features, recent performance and outlook for Ukraine, Moldova and Bosnia and Herzegovina, which were granted candidate status for EU membership in June and December 2022.
Commenting on the findings, BusinessEurope Director General Markus J. Beyrer said, “Top quality competitiveness checks are needed for all EU policy and regulatory initiatives.”
He added, “We urgently need to define and implement a strong and ambitious long-term competitiveness strategy ensuring that Europe becomes the place to invest and do business again.
“Concrete actions are needed to reduce the cost of compliance with European regulation. We welcome President von der Leyen’s recent pledge to reduce reporting burden by 25%, and look forward to tangible proposals.
“The European Commission must live up to its commitment to carry out top quality competitiveness checks on all EU regulatory initiatives, taking the cumulative impact of EU legislation on companies into account. In addition to individual legislative initiatives, the competitiveness check should assess the impacts of strategies and Commission annual work programmes in their entirety.”
He also said more concrete actions needed to achieve a fully functioning Single Market.
The message was timed to coincide with the publication of the European Commission communication “The Single Market at 30”.
He said, “European companies consider that the EU Single Market is the crown jewel of the European Union. 30 years is a significant milestone to celebrate, but it is also time for concrete actions for the benefit of citizens and businesses. We welcome the Commission’s acknowledgement of the urgent need to deepen the Single Market. But the proposed actions fall short of addressing barriers to the internal market for services. For example, 60% of current barriers to the provision of services have been there for 20 years and now also hamper the twin transition.
“A thorough screening of permitting, licencing and authorisation schemes, also beyond the narrow scope of services related to clean-tech, would help move forward.
“A fully-fledged programme to advance the Single Market integration by removing regulatory barriers to cross-border business operations and reducing bureaucracy has the potential to unleash €713 billion by the end of 2029. The time to act is now.”
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