Out of the tunnel. Maybe ” “

To send a positive message two weeks before the vote for the renewal of the European Parliament; to point out that according to “macro” data, the EU economy is “gradually” recovering from the crisis; to reiterate that reforms and sacrifices have served, especially in countries brought to their knees by the recession; to highlight the threats still looming over the horizon, and that therefore Europeans’ future will be bright with everyone’s contribution. These are the main messages of the European Commission contained in the “Spring Economic Forecasts”, presented on May 5 by Vice President Siim Kallas at the Berlaymont building in Brussels. “On the right path”. The Commission sent a sign of encouragement to 500 million Europeans who over the past eight years have only heard talks about crisis and sovereign debt, unemployment, risks of banking failures, austerity. Kallas – who assumed the powers of Economy Commissioner Olli Rehn, running as a candidate in the forthcoming elections – presented figures and charts with a half-smile. “Confidence is returning” coupled by “lower uncertainty”, GDP, domestic demand and exports are “gradually” increasing. The Spring Forecasts highlight a situation that is “on the right path”. Employment however “remains high” but improvement is expected “in the next two years”. Moreover, “the system has become consolidated” and financial markets “have stabilised”, with the possibility of extending credit to enterprises owing to the (costly) recovery of the banking system. Kallas highlighted the “improvements” in Countries that had been most severely affected by the recession at financial and social level, which amounts to positive forecasts for Ireland, (with “increasingly robust employment growth”), Spain, Portugal. A “moderate rebound” is expected in Greece. Suspended judgement for Cyprus. Germany ahead, the others follow suit. In the document of the Executive – where the conditional prevails – GDP growth is set to reach 1.6% in the EU and 1.2% in the euro area in 2014, and to improve further in 2015 to 2.0% and 1.7% respectively. “Domestic demand is expected to become the key driver of growth”, while consumer spending should increase in the next two years, also given low commodity prices (inflation is expected to remain low) and the upturn in employment, due to positively affect household incomes. In 2014, a decrease in general government deficits is projected to around 2½ % of GDP in both the EU and the euro area. The debt-to-GDP ratio is expected to peak at almost 90% in the EU before falling next year. Kallas highlighted a “gap” in terms of growth differentials across member States, but he equally underlined “broad-based recovery” which signals that “sacrifices and reforms” to overcome the crisis “are bearing fruits”. The unemployment knot lingers on: “Labour market conditions started to improve in the course of 2013 and more job creation as well as a further decline in unemployment rates should follow (to 10.1% in the EU and 11.4% in the euro area in 2015)”, states the Executive’s document. Germany is in good state of health, while its “steady expansion” is “driven by domestic demand”. The Netherlands, France, Poland, Sweden and the Baltic republics show encouraging prospects for the real economy; Italy glimpses recovery “thanks to exports”, despite the serious situation of public debt and high unemployment. The United Kingdom has overcome the difficulties and looks with confidence to the coming years. Recession lingers on in Croatia, while the “situation is bound to improve” in Slovenia. Positive results in Eastern Europe. The “recommendations” of the EU Commission to member States with the aim of pursuing the stabilization of public accounts and supporting recovery will be submitted on June 2, the day after the European elections: signalling a clear desire not to interfere with the electoral process. Kallas, having stressed the presence of a glimpse of light at the end of the tunnel, underlined the importance of averting a set of pitfalls: “The largest downside risk to the growth outlook remains a renewed loss of confidence from a stalling of reforms. Also, uncertainty about the external environment has increased”, he said. The EU performance is good, while China “is stabilizing”. A set of questions emerge regarding various productive and commercial systems such as those in Russia (the prospect of an armed conflict with Ukraine would have heavy economic repercussions) and other world competitors. As regards the EU, Kallas views the recovery of East European economy in positive terms: “In 1994, their income per head amounted to less than half of the EU’s. In 2004 this ratio had increased to 58%. Now, in 2014, the income per head of the 2004 wave of accession should reach 72% of the EU”. A nice way to “celebrate” ten years since EU adhesion.