The pace of growth is impacted by the rise in consumer prices now forecast at 7.6% in 2022 and 4% in 2023 by the European Commission.
Correspondent in Brussels
For several days now, the European Commission has been preparing people’s minds for a growth review. “We are not in the worst-case scenario, but the risks of getting there are increasing », stressed Monday Paolo Gentiloni, Commissioner for the Economy, on his arrival at a meeting of finance ministers of the euro zone. These words are the perfect synthesis of the summer economic forecasts published on Thursday. At this stage, there is no recession in sight in the EU. But economies are set to slow dangerously next year, however, due to the war in Ukraine and the “shock waves” it creates, from rising gas prices to rising food prices. Not to mention the global slowdown.
The Commission is therefore carrying out a substantial revision of its spring forecasts. In the EU as a whole, it expects growth of 1.5% next year instead of 2.3% in the spring. As for the euro zone, the slowdown is almost of the same order, with 1.4%, against 2.3% previously. “The worst would bring us to negative numbers”, warned Paolo Gentiloni again. The worst would be a total cut off of gas supplies by Moscow. Brussels, on the other hand, maintains its spring forecasts, with + 2.7% for the euro zone and + 2.6% for the whole of the EU. That “should be seen in light of the momentum gained with last year’s recovery and a somewhat stronger first quarter than previously estimated”, explained Paolo Gentiloni on Wednesday. The results of the summer season will be crucial for countries highly dependent on tourism. So far, the season has started very well.
Forte inflation
These revisions are largely attributable to the high inflation experienced by the bloc and its partners and the monetary restriction measures to which it leads, severely reducing the possibilities of financing. In the Eurozone, prices are expected to increase by 7.6% in 2022 and 4% in 2023, against 6.1% and 2.7% previously expected. A historic high of +8.4% should be reached during this semester.
Of course, not all countries will be in the same boat. In terms of inflation, we can expect significant differences, from 5.9% in France to 17% in Estonia and Lithuania this year. Countries outside the euro zone should suffer more. Same divergences on the evolution of the GDP. Germany’s growth is revised down by more than one point next year, to 1.3%. Same for Spain. While the country is going through a serious political crisis, Italian GDP is revised upwards for this year – to 2.9% – but significantly down for 2023, to 0.9%. This would place it at the bottom of the euro zone, with the risk of seeing spreads continue to climb.
In this summer period, the urgency for the EU is to prepare for the winter of 2022-2023 when Russia could cut its supplies or play on the nerves of Europeans by blowing hot and cold. Proposals will be made on Wednesday by the Commission. According to a document whose Le Figaro has taken cognizance, Brussels calls on the Member States to take binding measures in public buildings, limiting heating to 19°C and air conditioning to 25°C. In his July 14 interview, Emmanuel Macron said the public sector should lead by example. “We have to prepare for a scenario where we have to manage completely without Russian gas (…) it is likely. We need a general mobilization”said the president.
The question of the measures to adopt or to impose has emerged in recent weeks. “If we lower the heating by 2 degrees and set the air conditioners to 2 degrees higher, then we could save the equivalent in energy of what the Nord Stream 1 gas pipeline gives us over a year », affirmed in June the President of the Commission in Le Figaro.
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