EU faces economic slowdown due to trade tensions

BusinessEurope has published its autumn economic outlook. Based on input from its member federations in 35 countries, the outlook shows that the EU economy is experiencing an economic slowdown, reflecting declining global demand and uncertainties due to trade tensions.

The organisation forecast 1.3% real GDP growth in 2019 for the EU-28 and 1.2% in 2020. This entails a significant downwards revision from its Spring forecast released half a year ago (down from 1.6% for 2019 and 1.7% for 2020).

Launching the publication, BusinessEurope’s Director General Markus J. Beyrer told this site, “As a consequence of global trade tensions, European manufacturing output is down around 2% from its peak two years ago. The big economic question for 2020 will be how fast and with what magnitude the slowdown in export sectors affect the rest of the economy.

In the event of a downturn, EU member states should make use of the flexibility provided for in the Stability and Growth Pact to undertake appropriate counter-cyclical fiscal policy, including to support growth-enhancing investments and structural reforms”.

The outlook also takes an in-depth look at the growing problem with skills shortages experienced by European business. 

Commenting on the section Beyrer added: “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. 

"In the US the annual number of graduates with a degree in science, technology, engineering and mathematics has increased by almost 20% since 2013, compared to only a 1% increase in the EU.”

The Economic Outlook Autumn 2019 is here.

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Martin Banks

Martin Banks

Martin Banks is a highly qualified journalist with many years experience of working within the EU institutions. He is an occasional, and highly valued, contributor to EU today, writing on a wide variety of issues.

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