Turning Euroseptic

Many economies across Europe still look unhealthy, says Will Hodges

As economic growth starts to pick up across much of the world, Europe finds itself the sick man of the global economy. Economists at the European Commission (EC) forecast growth of 1.1 per cent across the eurozone in 2014.

Though a noticeable improvement on the forecast for 2013 (a contraction of 0.4 per cent is projected), it compares poorly with projected growth rates for other comparable economies such as that of the US, where GDP grew by 5 per cent on an annualised basis during the second quarter of 2013. It's predicted that many eurozone members will continue to experience anemic levels of growth while some, such as Greece, are expected to see further recession.

While there is encouraging news coming out of some sectors, such as manufacturing, the region continues to face a number of challenges which are hampering its recovery. One contentious issue has been the rally the region's currency has seen. A strong euro has made EU exports less competitive and dashed hopes of an export-led recovery for major exporters such as Germany and Italy.

Meanwhile, analysts have warned that any economic recovery is likely to do little to improve the region's record levels of unemployment. The average rate of unemployment across the 18 member states is forecast to remain static at 12.2 per cent in 2014, bringing the total number of jobseekers in the region to almost 20 million. At the top of the scale, unemployment rates in both Spain and Greece look likely to top 26 per cent next year.

The months ahead: the prognosis for Europe's key economies


France has fared better than many of its southern neighbours during the course of the crisis and will avoid a recession this year, albeit by the skin of its teeth with GDP forecast to grow by just 0.2 per cent. 2014 will be brighter with the economy projected to expand by 0.9 per cent, though this is some way below the 2.2 per cent growth forecast for the UK.

France's strong workers unions and strict laws surrounding employment have had a harmful impact on unemployment levels, however, with unemployment rates forecast to hit 11 per cent this year.


Europe's largest economy has suffered its fair share of pain since the start of the global economic crisis, despite finding itself as the self-appointed lender of last resort for many of the region's debt-laden states. German industry, as it relies heavily on exports to the rest of the continent, has been hit hard by weak consumer demand, while the European Commission forecasts German GDP to grow by just 0.5 per cent in 2013, before rising to 1.7 per cent next year.

One bright spot has been employment rates, which have remained at healthy levels throughout the crisis, with unemployment forecast to average just 5.4 per cent in 2013.


Silvio Berlusconi's lurking presence behind the scenes of Italy's political stage continues to spook investors away from the eurozone's third largest economy, dampening hopes of a swift recovery. The former prime minister faces a vote on 27 November to determine whether he'll be expelled from parliament, having been convicted for tax fraud.

The commission forecasts Italy's GDP to contract by 1.8 per cent this year, before growing by 2.5 per cent in 2014. Of continued concern is the government's mountain of public debt, which is expected to reach 134 per cent of GDP in next year - one of the highest rates in the world.


Since the start of the crisis, the Spanish economy has been one of the worst performing in Europe, having recorded nine consecutive sectors of negative growth. There are signs that the country is now turning a corner, with positive growth forecast for the second half of 2013 and growth of 0.5 per cent projected for next year.

Unemployment shows no sign of letting up, however, and is expected to peak at 26.4 per cent in 2014, making Spain's unemployment figures the highest in the eurozone area. The International Monetary Fund (IMF) has warned that unemployment levels will not start to fall until Spanish workers begin accepting lower wages.