The EU economy will experience its fastest growth for decades this year according to the European Commission, which has boosted its forecasts for this year and next as the relaxation of pandemic-related restrictions fuels a rebound in activity.
Growth across the EU will expand by 4.8 per cent this year and 4.5 per cent next year, Brussels said on Wednesday. That would be the most rapid expansion seen since 1976, although back then the bloc contained far fewer nations.
“The EU economy is set to see its fastest growth in decades this year, fuelled by strong demand both at home and globally and a swifter-than-expected reopening of services sectors since the spring,” said Paolo Gentiloni, the bloc’s economics commissioner.
The EU economy was hit by a 6 per cent contraction last year — the worst since it was formed.
Germany will log growth of 3.6 per cent this year, while France will expand by 6 per cent and Italy by 5 per cent, the Commission forecast. Romania is tipped to chalk up the most rapid expansion, at 7.4 per cent.
The euro area’s gross domestic product will also expand by 4.8 per cent this year and 4.5 per cent in 2022, compared with previous forecasts of 4.3 per cent and 4.4 per cent.
That would take real GDP back to its pre-crisis level in the final quarter of this year — sooner than the Commission had predicted as recently as this spring.
The improving outlook is being fuelled by rapid progress with vaccinations, which has enabled many European countries to ease restrictions, boosting service businesses in particular. Tourist travel within the EU is also beginning to revive, aiding consumer spending.
More than 62 per cent of the adult population in the EU and European Economic Area have received at least one vaccine dose.
However Gentiloni warned that it was “essential” for member states to “maintain policy support as long as needed” in order to “keep the recovery on track”.
“We must redouble our vaccination efforts, building on the impressive progress made in recent months; the spread of the Delta variant is a stark reminder that we have not yet emerged from the shadow of the pandemic,” he said.
The rapid expansion, coupled with rising energy prices and production bottlenecks, will push consumer prices up this year, the commission said. Euro area inflation is expected to average 1.9 per cent this year, but it predicted the pressures would moderate in 2022, bringing the rate back down to 1.4 per cent.