Source: The Telegraph
The UK’s growth will beat its largest eurozone peers in the years to come, remaining robust despite global headwinds.
The European Commission (EC) unveiled its latest forecasts on Tuesday, predicting that the UK economy would grow 3.1pc in 2014, more than 10 times faster than France.
Growth in the UK is set to slow in successive years, but will continue to expand faster than the eurozone’s four largest economies – Germany, France, Italy and Spain.
Continued malaise in the euro area has buffeted the UK, as the currency bloc includes a large number of its trading partners. The US, which is far less exposed to the eurozone’s plight, is now expected to grow more strongly than the UK in 2015 and 2016.
While the UK continues to perform, its large continental peers have seen their horizons darken. Guillaume Menuet, of Citi, said the EC had made a “sharp cut” in its eurozone forecasts for 2014 and 2015.
France and Germany are now expected to grow at just 0.3pc and 1.3pc respectively this year, lower than the EC’s previous forecasts of 1pc and 1.8pc. Italy is expected to move in reverse, contracting by 0.4pc in 2014.
Having implemented sweeping reforms, Spain is to be the strongest performer of the euro area’s largest four economies in 2015. The EC has pencilled in growth of 1.7pc.
“Given that these three countries [Germany, France and Italy] account for nearly 60pc of eurozone GDP, this suggests a very poor outlook for the eurozone”, Open Europe analysts said.
The EC anticipates that the euro area will have expanded by just 0.8pc this year.
Further risks to eurozone growth were noted by the EC – including threats from tensions with Russia, and intensified conflicts in the Middle East and north Africa.
By 2016, the EC stated the “legacies of the crisis [will] fade away”, as structural reforms “bear fruit, labour markets improve and more supportive policies and financing conditions are in place”.
The EC said that “increasing geopolitical risks and less favourable world economic prospects” were responsible for a deterioration in the eurozone’s fortunes.
On unemployment, the outlook is set to remain largely unchanged over the coming years.
Open Europe said that “any real prospect on employment growth in the eurozone seems optimistic”.