EU set to miss growth targets

The European economy will continue to improve over the next three years, but the ambitious Lisbon targets remain out of reach, the European commission said on Monday.

Monetary affairs commissioner Joaquín Almunia said that the latest EU forecasts showed GDP growth of 2.8 per cent for the 25 EU member states in 2006 – well up on the 1.7 per cent in 2005.

And while growth is expected to slow to around 2.4 per cent for 2007 and 2008, the performance is expected to remain “around potential”.

Next year’s increase in German VAT rates, possible increases in oil prices and the continued weakening of the US economy are expected to be the main reasons for the slight slowdown in growth, the Spanish commissioner said.

But despite the good performances expected over the next few years, Almunia warned national governments not to take their foot off the gas when it came to economic and labour market reforms.

He said that the EU as a whole is expected to create more than seven million jobs between 2006 and 2008, taking average employment across the EU to 65.5 per cent by 2008.

But this would still not be enough to lift total employment levels beyond 70 per cent by 2010, the target set in the Lisbon strategy, the Spaniard added.

More work also needs to be done to get public finances back on track in some countries.

Hungary, in particular, needs to do much more to reduce public debts to below the three per cent of GDP level set by Brussels, with debt levels expected to reach 5.6 per cent at best by 2008.

Portugal will also continue to face EU sanctions for excessive deficit levels, but both France and Germany are expected to be let off the hook in the spring following their efforts to cut public debt.

• Previous article
• Next article