Barring unforeseen delays

"Economic recovery in Europe is solid and continues, despite recent external turbulence and tensions in the sovereign debt market". European Commissioner for Economic and Monetary Affairs Olli Rehn presented the Spring Forecasts and underlined that the economic recovery maintains momentum despite slowdowns and new risks. However, due to increased uncertainty, geopolitical instability and the surge in commodity prices the balance of risks is regarded as "tilted to the downside". Equal priority is ascribed to the implementation of reforms to ensure sound public finances and strengthen production systems. Fiscal consolidation and reforms. The Commissioner for Economic and Monetary Affairs underlined on May 13: "It is now essential to strengthen these trends of growth and consolidation and also ensure that they translate into more and better jobs". For the EU Executive – committed in identifying measures to redress national finances in conjunction with the ECB, the EU Council and the IMF –, "this calls for continued fiscal consolidation and determined implementation of structural reforms that help job creation and improve the competitiveness of our economies". With plummeting employment family spending powers decline, thus seriously affecting domestic consumption rates. Figures presented in Brussels show that the situation varies across Member States. GDP in the euro area is projected to grow from 1.6% in 2011 to to 1.8% in 2011 and 2.0% in 2012, while EU27 is at 1.8 in 2011 and 1.9 in 2012. While the upturn is set to be strong in Germany (2.6 in 2011, ensuing positive trends in 2010), Poland (4.0 this year), and in the Scandinavian and Baltic States, the pace of economic activity in Greece, Portugal, Ireland, Spain and Italy is remarkably slower. Modest forecasts involve France, the UK, The Netherlands, Austria, Belgium, Slovakia and Hungary. "The aggregate picture masks marked differences in developments across Member States. Some countries, in particular Germany, but also some smaller export-oriented economies, have registered a solid rebound in activity, while others, notably some peripheral countries, are lagging behind", Rehn pointed out. Amid uncertainty. In the Forecast document (that was released in conjunction with Eurostat GDP estimates for the first trimester of 2011) the Commission states that EU27 is expected to consolidate financial recovery, and underlines that "prospects for 2011 have been slightly upgraded compared with last autumn" highlighting comforting "better prospects for the global economy and by upbeat EU business sentiment", barring new and unexpected turbulence: "Political changes in the Middle East and North Africa and the economic fallout of the earthquake and tsunami in Japan (the Commission fails to mention the Fukushima nuclear disaster – ed.’s note) have heightened uncertainty and constitute downside risks to global economic activity, with the potential to lead to globally higher inflation and lower growth than incorporated in the baseline". Development without employment? Employment is once again a major concern, as it is projected "to improve modestly", considering millions of jobs lost since 2008. The situation in European labour markets "continues to be diverse, with the rate of unemployment ranging from 4-5% in the Netherlands and Austria to 17‑21% in Spain and the Baltic States". Employment in the EU "increased slightly in the last quarter of 2010, driven by improvements in all sectors, except industry and construction". However, despite "brightening somewhat since the autumn, the outlook remains for a rather jobless recovery".Investments consumption. Another aspect: "Public deficits are set to decline to about 3¾% of GDP by 2012", while public debts are on the increase. The Commission states: "Equipment investment is set to accelerate markedly this year, supported by an upward revision of export growth". Construction investment, in contrast, "will continue to contract reflecting the ongoing adjustments in several Member States". Inflation, however, "is rising faster, reflecting the increase in commodity prices". Private consumption, meanwhile, is expected to pick up modestly this year in the EU; its gradual recovery should be underpinned thereafter by slowly improving labour-market conditions, as expected. In addition, "the still-ongoing deleveraging process in the corporate and household sectors, heightened risk aversion and the impact of fiscal consolidation are set to weigh on capital and consumer spending in the short term".