Press Release: Autumn economic forecast 2008-2010: GDP growth comes close to a stand-still in the EU and euro area

European Union economic growth should be 1.4% in 2008, half what it was in 2007, and drop even more sharply in 2009 to 0.2% before recovering gradually to 1.1% in 2010 (1.2%, 0.1% and 0.9%, respectively, for the euro area). The Commission's autumn forecasts showed that the EU economies are strongly affected by the financial crisis, which is aggravating housing-market correction in several economies at a time when external demand is fading rapidly. While the important measures taken to stabilise financial markets have begun to restore confidence, the situation remains precarious and the risks to the forecasts significant. As a result, employment is set to increase only marginally in 2009-2010, after the 6 million new jobs created in 2007-2008, and unemployment is expected to rise by about 1 pp. over the forecast period after being at its lowest for more than a decade. More positively, inflationary pressures are diminishing as oil prices fall, and the risks of second-round effects fade away. After reaching the best position since 2000, the overall budgetary position is also set to deteriorate while the rescue packages could raise public debt.