2017621 Anatomyofacomeback:theEUsresurgenceincharts

EU Economy

Anatomy of a comeback: the EUs resurgence in charts

Rising optimism can be seen in labour markets and spending as well as opinion polls
FT Data

4 HOURS AGO by: Valentina Romei

Overthepast12months,theoutlookfortheEUhasbrightenedindramaticfashion.
Ayearago,aftertheUKsJune2016votetoleavethebloc,economistswerecuttingtheirforecastsforEU
growth.CampaignersforBrexitproclaimedthatiftheUKhadstuckwiththeblocitwouldhavebeen
shackledtoacorpse.
But2017hasbeenverydifferent,markedbytherecoveryintheeurozone,whichinthefirstquartergrew
twiceasfastastheUS.
Consensuseurozonegrowthforecastsforthisyeararenow0.6percenthigherthaninAugustlastyear
andhigherthanthosefortheUK.
Itseemslikelythatwellseemanyforecastersexpectationsfor2017growthrevisedhigher,saysChris
Williamson,chiefbusinesseconomistatIHSMarkit.Ayearagohewasstressingneartermdownsiderisks
foranalreadylacklustreeurozoneeconomy.
SupportfortheEUhasgrowninlinewiththegrowthfiguresandrisingoptimismcanbediscernednot
justinopinionpolls,butinstrongerlabourmarketsandrisingimports.

Thetrendisaregionalone,incontrastwithrecentyearswhenthehealthystateoftheGermaneconomy
contrastedwiththedoldrumsenduredbyothereurozonemembers.Growthacrosstheeconomiesis
becomingmorebroadbased,wroteFocusEconomicsinanote.All28EUeconomiesgrewlastyearthe
firsttimethatwasthecasesincethefinancialcrisis.

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2017621 Anatomyofacomeback:theEUsresurgenceincharts

StrongergrowthmeansthattheEUmarkettowhichtheUKcurrentlysendsabouthalfofitsexports
isexpanding,asistradewithinthebloc.IntraEUimportsinthefirstfourmonthsof2017increasedatan
annualdoubledigitrateineightEUcountries,andgrewbymorethan5percentinallEUcountriesexcept
fortheUKandFinland.

Theeurozonesimprovedperformanceisalsoleavingitsmarkinsomeofthecountriesthatwereworsthit
bythefinancialcrisis,notablyinsouthernEurope.
SomefouryearsagobothSpainandGreecesufferedextraordinarylevelsofunemployment,whichleftover
onequarterofthepopulationwithoutajobandyouthunemploymentwasover50percent.Butthe
proportionofthosewithoutworkinbothcountrieshasbeensteadilyshrinkingsince.

TheimprovementintheperformanceofcentralandeasternEuropehasbeenevenmoremarked.
ConcernsaboutimmigrationfromtheEUparticularlyfromformercommuniststatesplayedabigrole
insecuringthevotetoleavetheblocinlastyearsBritishreferendum.
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2017621 Anatomyofacomeback:theEUsresurgenceincharts

Atpresent,mostworkpermitapplicantstotheUKcomefromRomaniaandPoland,followedbyItaly,
SpainandBulgaria.
ButiftheUKhadnotembarkedonBrexit,thelevelsmighthavefalleninanycase.Theincomegap
betweentheUKandcentralandeasternEuropeisnarrowing,makingtheirdomesticlabourmarketsmore
attractivethanbefore.
RomaniawasthefastestgrowingEUcountryforthefirstquarterofthisyear.All11formercommunist
blocEUmembersgrewfasterthantheEUaverageduringthattime,easilyoutstrippingtheUK.

While,theoverallgapbetweentheeconomiesofoldandnewEUmemberstatesremainsconsiderable,itis
convergingoverthelongerterm.
LevelsofGDPpercapitainEstonia,Latvia,PolandandSlovakia,forexample,werearoundhalftheEU
averagein2004,buttheyarenowmuchclosertothemean,atbetween70and80percent.

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2017621 Anatomyofacomeback:theEUsresurgenceincharts

WagesincentralandeasternEuropearealsobecomingmoreattractiveasaresultofeconomicgrowthand
tighterlabourmarkets.Inthefirstquarterof2017,wagesgrewatanannualrateofover4percentinmost
easternEuropeancountriesandbyarecord17percentinRomaniacomparedwithonly1.6percentinthe
EUasawholeand1.4percentintheUK.

Printasinglecopyofthisarticleforpersonaluse.Contactusifyouwishtoprintmoretodistributetoothers.The
FinancialTimesLtd.

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2017621 Anatomyofacomeback:theEUsresurgenceincharts

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