The economic weather above the European Union seems to be clearing up at last, judging by the forecasts from the Commission, which have rarely been this optimistic. It’s a rare moment to savor as it should be, but without easing efforts, especially in countries still facing difficulties… like France.
Brussels has revised its growth forecasts upward for 2015 and the following year. Good news keeps coming like pearls on a string: the expected growth for this year is 1.8% (1.5% in the eurozone) and 2% in 2016 (1.9% for the eurozone). These are levels not seen since the crisis that began in 2008, which almost dragged several countries underwater.
This is because the European Union has embarked on substantial underlying movements. The euro, driven by a European Central Bank that is greasing the zone’s economic machinery with billions of euros, is at its lowest against the dollar, allowing companies to gain competitiveness mechanically… and allowing countries to see their interest rates drop, sometimes even into the negative (France has never borrowed at such low rates).
Europe as a whole also benefits from the drop in oil prices, which should remain stable in the medium term. Energy imports are less expensive, and bills indexed to fuel prices are also pointing downward: it is good for purchasing power.
States can also congratulate themselves for having started serious austerity measures early on. Across the entire EU, the average deficit will settle at 2.5%, and 2% for the eurozone alone. Of course, there are some black sheep that will not comply with European rules, such as Spain, Finland, Portugal, and… France. These countries will exceed the 3% deficit this year, and in France’s case, it will take until 2017 to finally see the accounts balanced.
Small consolation for France: despite the catch-up in terms of activity, unemployment is not expected to decrease this year.
