BusinessEurope Economic Outlook Autumn 2019 - EU economy weakens as trade tensions continue
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 EU28 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).
As a consequence of trade tensions, European manufacturing output is down around 2% from its peak two years ago. Whilst strong wage rises and increasing employment are supporting domestic consumption, this is likely to fall as consumers become more cautious, acting as a brake on service sector growth.
Substantial risks to the economic outlook are concentrated on the downside due to the potential for escalation of trade tensions between both the USA and China and the USA and the EU, which would impact negatively on business, and the uncertainties that persist around a possible no-deal Brexit.
The outlook also takes stock of the difficulty of hiring specialists with skills in information and communication technology that many businesses experience. It concludes that 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.
Individual country evaluations
Answers to this autumn's questionnaire were received in October 2019.
| Real GDP growth % | Inflation % | Unemployment % | ||||
|---|---|---|---|---|---|---|
| 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | |
| EU28 | 1.3 | 1.2 | 1.5 | 1.6 | 6.2 | 6.0 |
| Euro-area | 1.1 | 1.0 | 1.3 | 1.4 | 6.9 | 6.7 |
| Austria | 1.5 | 1.3 | 1.5 | 1.5 | 4.6 | 4.8 |
| Belgium | 1.2 | 1.3 | 1.5 | 1.6 | 5.7 | 5.7 |
| Bulgaria | 3.3 | 3.4 | 2.4 | 1.7 | 5.0 | 4.8 |
| Croatia | 3.1 | 2.7 | 0.9 | 1.0 | 7.8 | 6.9 |
| Cyprus | 3.2 | 2.9 | 0.5 | 1.2 | 7.0 | 6.0 |
| Czechia | 2.7 | 2.0 | 2.6 | 2.5 | 2.0 | 2.0 |
| Denmark | 1.8 | 1.5 | 1.1 | 1.5 | 4.9 | 4.8 |
| Estonia | 3.0 | 1.9 | 2.3 | 1.9 | 4.9 | 5.9 |
| Finland | 1.1 | 0.9 | 1.0 | 1.1 | 6.5 | 6.3 |
| France | 1.3 | 1.2 | 1.3 | 1.4 | 8.4 | 8.2 |
| Germany | 0.5 | 0.5 | 1.4 | 1.5 | 2.9 | 2.9 |
| Greece | 2.0 | 2.8 | 0.6 | 0.7 | 15.9 | 14.0 |
| Hungary | 4.3 | 2.7 | 3.5 | 3.3 | 3.5 | 3.4 |
| Ireland | 4.0 | 3.4 | 3.1 | 2.5 | 5.4 | 5.0 |
| Italy | 0.0 | 0.0 | 0.7 | 1.8 | 9.8 | 9.7 |
| Latvia | 2.5 | 2.6 | 2.9 | 2.5 | 6.4 | 6.2 |
| Lithuania | 2.7 | 2.4 | 2.5 | 2.1 | 6.2 | 6.0 |
| Luxembourg | 2.5 | 2.6 | 1.8 | 1.6 | 5.3 | 5.2 |
| Malta | 5.3 | 4.8 | 1.8 | 1.9 | 3.8 | 3.9 |
| Netherlands | 1.6 | 1.5 | 2.5 | 1.4 | 3.5 | 3.6 |
| Poland | 4.4 | 3.6 | 2.1 | 2.7 | 3.8 | 3.5 |
| Portugal | 1.9 | 1.7 | 0.3 | 0.6 | 6.2 | 6.0 |
| Romania | 1.3 | 1.4 | 4.2 | 3.7 | 4.1 | 4.0 |
| Slovakia | 3.6 | 3.3 | 2.4 | 2.3 | 5.9 | 5.6 |
| Slovenia | 2.8 | 3.0 | 1.8 | 2.0 | 4.3 | 4.0 |
| Spain | 2.0 | 1.6 | 0.7 | 0.8 | 14.0 | 12.9 |
| Sweden | 1.7 | 1.5 | 1.7 | 1.6 | 6.4 | 6.4 |
| United Kingdom | 1.4 | 1.5 | 1.8 | 2.1 | 3.9 | 3.9 |
Source: Eurostat, and calculations based on member federation economic forecasts