Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Europe’s Economic Prospects Brighten on Fiscal Support, Vaccines

EconomyMay 12, 2021 04:54AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Europe’s Economic Prospects Brighten on Fiscal Support, Vaccines

(Bloomberg) -- The euro-area economy will grow more quickly this year than previously forecast as the region’s vaccination campaign gathers speed, fiscal support is rolled out and a strong global rebound helps exports.

The European Commission upgraded the euro area’s growth for this year to 4.3% from 3.8% after taking account of the 800 billion-euro ($971 billion) joint recovery fund for the first time. Output in the European Union’s 27 member states is now expected to reach its pre-pandemic size by the end of this year, earlier than initially thought.

The currency bloc is also expected to grow more quickly in 2022, when more money from the joint stimulus will flow into projects to build a greener and more-digital future. The recovery will still be uneven within the EU, with economies in France, Spain and Italy not reaching their pre-pandemic levels until 2022.

“While we are not yet out of the woods, Europe’s economic prospects are looking a lot brighter,” Valdis Dombrovskis, EU Commission executive vice president, said in a statement. “Much hard work still lies ahead, and many risks will hang over us as long as the pandemic does.”

The upgrade brings the commission’s forecast for this year roughly in line that of the International Monetary Fund, which raised its outlook for the euro area to 4.4% last month. The European Central Bank presents new forecasts in June.

The commission said the unprecedented support from national governments to prop up businesses and households during the pandemic pushed euro-area public debt to 100% of gross domestic product last year, the first time that level has been reached. It is expected to peak at 102% before falling slightly to 101% in 2022. Italy’s debt is seen reaching 160% of gross domestic product this year.

Close to 29% of the EU’s population have now received at least one jab, and signs of a rebound are already piling up. Investor confidence in the German economy, the region’s largest, jumped to the highest level in more than 21 years this month and European manufacturing is booming, even if the sector faces shortages of parts and raw materials.

This has fueled a debate about a jump in prices after years of subdued pressure, despite ECB officials saying they they expect any elevated inflation to be temporary.

The commission’s forecast supported that view, with inflation seen reaching 1.7% this year before falling back to 1.3% in 2022. Price growth could turn out higher if the rebound is stronger than expected or if current supply constraints turn out more persistent, it said.

The commission noted that risks to its outlook will remain high as long as Covid-19 isn’t under control everywhere. The situation in large developing nations presents a global threat as new virus mutations could make a comeback.

It also addressed the debate over how much savings will contribute to the rebound, concluding that surveys suggest they won’t give consumer spending much of a boost. Much of the saving has been by groups least-affected by the pandemic, and are likely to contribute to “growing wealth inequality and an increasing generational wealth gap,” it said.

©2021 Bloomberg L.P.


Europe’s Economic Prospects Brighten on Fiscal Support, Vaccines

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email