EU faces economic slowdown due to trade tensions
– Need to support investment and structural reforms –
Today, BusinessEurope published its Autumn Economic Outlook 2019. Based on input from its member federations in 35 countries, the outlook shows that the EU economy is experiencing an economic slowdown, reflecting declining global demand and uncertainties due to trade tensions. We forecast 1.3% real GDP growth in 2019 for the EU-28 and 1.2% in 2020. This entails a significant downwards revision from our Spring forecast released half a year ago (down from 1.6% for 2019 and 1.7% for 2020).
Launching the publication, BusinessEurope’s Director General Markus J. Beyrer said:
“As a consequence of global trade tensions, European manufacturing output is down around 2% from its peak two years ago. The big economic question for 2020 will be how fast and with what magnitude the slowdown in export sectors affect the rest of the economy. In the event of a downturn, EU member states should make use of the flexibility provided for in the Stability and Growth Pact to undertake appropriate counter-cyclical fiscal policy, including to support growth-enhancing investments and structural reforms”.
The outlook also takes an in-depth look at the growing problem with skills shortages experienced by European business. Commenting on the section Beyrer added: “Whilst there is evidence that companies are increasing wages considerably for professions where shortages are most acute, we need a response from the educational system to address growing skills imbalances. In the US the annual number of graduates with a degree in science, technology, engineering and mathematics has increased by almost 20% since 2013, compared to only a 1% increase in the EU.”
Read our Economic Outlook Autumn 2019 here.