EU Economy Brief 46/2017

Numbers of the Week

  • Personal transfers by EU residents to non-EU countries declined by 3.2% to €30.3bn in 2016, compared to the previous year. Intra-EU flows held steady at €14.2bn. Poland, Portugal (both €2.8bn) and Romania (€2.2bn) accounted for the largest net inflows of personal transfers. France (-€9.4bn), UK (-€4.6bn) and Germany (-€4.2bn) counted the largest net outflows. (Eurostat)
  • Employment-induced residence permits issued in the EU rose by 20.5% in 2016, down from an increase of 23.4% in 2015. Permits for employment reasons accounted for a quarter of the total 3.4 million first residence permits. Poland issued more than half of all such permits (494k), mainly to Ukrainian nationals, followed by the UK (117k) and Germany (40k). (Eurostat)
  • Number of small banks in the EU declined by 3.3% between Q3 2016 and Q2 2017, a reduction of 86 credit institutions. During the same period the number of medium-sized banks increased by 38 and the number of large banks dropped by 1, pointing towards some consolidation in the sector. Total value of assets held by the banking sector fell by 2.4% in the EU and by 1.5% in the euro area. (ECB)
  • Annual consumer price inflation in the UK remained at 3.0% in October 2017, unchanged compared to the previous month. Rising food prices, growing at 4.1%, the fastest annual rate in 4 years, put upward pressure on inflation, which was offset by falling fuel and furniture prices. (ONS)

Chart of the Week­

Robust yet differentiated growth throughout EU-28 and euro area

  • Economic growth in the EU continues upward trend at annual rate of 2.5% in Q3 2017, with year-on-year growth rates consistently increasing from 1.9% back in Q3 2016. A similar development can be observed in the euro area. The quarter-on-quarter output growth of the EU and the euro area, both at 0.6%, were stable compared to previous quarters.
  • Spread between best and worst performer is 7.1 percentage points. The UK, Denmark, Belgium, Italy, and France are underperforming relative to the EU average in terms of YOY growth. The fastest growth rates can be observed in Romania, the Czech Republic, Latvia, and Poland. Further convergence may be at work, though Romania may be experiencing overheating.
  • Strong performance in CEE driven by both external and domestic factors. Solid growth in Germany boosts Central European exports. At the same time, high employment levels and wage growth fuel domestic consumption, while investment is spurred by the EU’s Cohesion Funds.
  • Most former programme countries are recovering. The YOY growth rates for all bailout countries have been persistently positive since at least Q2 2015, with Portugal and Spain commencing their recovery already in Q4 of 2013 and Q1 of 2014, respectively. An exception is Greece, the only current programme country, where feeble growth has been interrupted by numerous drops in GDP.

Subscribe to our EU Economy Brief and receive it every Friday.

Previous editions