This is a little-predicted story: the eurozone is growing faster than the us. On Wednesday, when jean-claude juncker delivered his annual trade union address on Wednesday, Europe’s booming economy was among the top of the list. The President of the European commission told MEPs that ten years after the crisis, “the European economy has finally bounced back. Describing the economic recovery as well as the eu’s newfound solidarity after Britain voted to leave, Mr Juncker declared: “the wind is back in Europe”.
In fact, over the past two years, the growth of the euro zone in 19 countries has quietly overtaken that of the United States. In the latest annual growth figures, the single currency area grew 2.3 per cent, compared with 2.2 per cent in the world’s largest economy. The euro zone’s unemployment rate has fallen to its lowest level since 2009, and factories are humming again, with output falling by 3.2% last year.
James Nixon, chief European economist at Oxford economics, said the upturn in wealth is likely to continue. “Over the past decade, the eurozone has done a lot of work to bring its house in order and to carry out substantial structural reforms. It was an extraordinary, very slow process, but it began to produce results. ”
The euro zone may do better, but the crisis has left deep scars and many wounds are far from healed. In France, the confidence of the French President, Emmanuel macron, and his reform agenda contributed to the economy’s annual growth rate of 1.7%, but economic growth continued to lag the euro-area average. Germany’s economy is still strong, but germans are increasingly worried about inequality and low wages. Spain has recovered from the crisis, but inequality is rising and unemployment is still at 17%, second only to Greece. Italy’s economy has improved, but worries about the bank remain.
Despite rapid job growth, unemployment in the euro area remains high (9.1%), below the eu average (7.7%) and America (4.3%). Cinzia Alcidi, head of economic policy at the centre for European policy research, said the eurozone economies needed to expand faster to bring unemployment down sharply. “The outlook for the eurozone has improved a lot, but we are still close to 2 per cent [economic growth], so the impact on unemployment will be more moderate and take more time.”
European leaders also want to push for reforms in the eurozone. Two days after Germany’s election on September 24th, Mr Macron is expected to present a detailed blueprint for his vision, including eurozone finance ministers and parliaments. “The eurozone is transformed from an imperfect monetary union into a real economic continent, or it may disappear,” the finance minister, Bruno Le Maire, told the financial times last week.
But the details differ. “There is a certain correspondence in a broad range of ideas, but there is disagreement on how to do that,” says CEPS’s Alcidi. “The French idea may be more ambitious than Germany can accept,” she said. Differences in the size of the euro zone’s budget or the differences that should be used in the budget may differ.