Press Release: Spring forecast 2011-12: European recovery maintains momentum amid new risks

The EU economy is set to further consolidate its gradual recovery, with prospects for 2011 looking slightly better than projected in the autumn. GDP is projected to grow by around 1¾% this year and by close to 2% in 2012. This outlook is supported by better prospects for the global economy and overall upbeat EU business sentiment. Inflation, however, is rising faster, reflecting the increase in commodity prices.. Headline inflation is projected to average almost 3% in the EU and 2½% in the euro area this year, before easing to about 2% and 1¾% respectively in 2012. Meanwhile, labour-market conditions are expected to slowly improve over the forecast horizon.

The unemployment rate is projected to fall by ½ percentage point to a little over 9% and to 9 ¾ % in the EU and the euro area by 2012. Fiscal consolidation is progressing, with the public deficit set to decline to about 3¾% of GDP by 2012. The prospects continue to vary considerably for individual Member States, however.