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 approached his 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”.
There is a long way to go in the weak eurozone recovery.
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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. “In the last decade, the eurozone has done a lot of work to bring its house in order and carry out a lot of structural reform. 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.”
This explains why eurozone observers are concerned about economic reform. Above all, they are considering whether Macron will succeed in pushing for far-reaching Labour reforms that will make it easier for small and medium-sized businesses to fire workers, thereby increasing hiring. French ministers believe such reforms will make it easier for young people and low-quality workers to enter the Labour market. If France succeeds, Italy may be under pressure to do something similar.
“Within this framework, this could be the beginning of the long-term expansion of the eurozone and the beginning of the golden age of the eurozone,” Nixon said.
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.
The euro zone may get back on its feet. But Greece?
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In addition to support the euro, the European Union has a leading position in the trade: Donald trump to help the “America first” vote on the election of the European Union will be discussed for a long time – Japan’s trade agreement to near the finish line. This week, Mr Juncker said the commission wanted to open trade talks with Australia and New Zealand – possibly one of the dreams of the UK’s “Canzuk”, a dream of the English commonwealth trade union.
“The British position looks very lonely,” Nixon said. “Britain’s argument to some extent has been we don’t want to be like a part of the failure of the club, I always thought that this is a kind of Anglo – Saxon type of looking at things (undervalued) political commitment to make the flight. “