Euro Region Growth Expected to Ease in 2017

Economic growth is projected to slow slightly this year as quickening inflation is seen curbing consumer spending while the start of negotiations over Britain’s withdrawal from the European Union (EU) are expected to hamper investment, the European Commission (EC) has said.

Gross domestic product (GDP) growth in the 19 countries that use the euro is expected to slow to 1.6% this year from 1.7% in 2016 before accelerating again to 1.8% in 2018, the commission said in its winter economic assessment, published on Monday.

The main reasons for the slowdown this year are expected to be a deceleration in private consumption growth to 1.5% from 1.9% last year, which was the main growth driver, as energy price increases are projected to impact negatively on households’ real income. A slowdown in government spending to 1.4% from 2% last year is also predicted by the commission.

Investment will remain “restrained by the still moderate demand outlook as well as the high level of uncertainty surrounding the unfolding ‘Brexit’ process and the unknown details of future US policies”, the commission said.

By Stephen Holmes