EU Economy Brief 47/2017

Numbers of the Week

  • Out of 18 euro-area countries, 6 are at risk of non-compliance with the Stability and Growth Pact (SGP). The Commission’s assessment of member states’ 2018 Draft Budgetary Plans concluded that 5 countries currently under the preventive arm of SGP and 1 under the Excessive Deficit Procedure (France) are at risk non-compliance with 2018 targets. (European Commission)
  • Business sentiment in the euro area reaches 6-year high in November 2017. The survey-based Purchasing Manager Index (PMI) climbed to 57.5 points this month, up from 56.0 in October. The uptick was again led by manufacturing. Employment growth and new manufacturing orders both reached 17-year highs. (IHS Markit)
  • Investment growth in the EU at average annual rate of 3.2% in the period 2013-16, exceeding the pre-crisis average of 2.8% (1995-2005). Government investment at 2.7% of GDP in 2016 was, however, at a 20-year low. In a survey, a third of all municipalities report that investment over the last five years has been below needs. Most-affected sectors are urban transport, ICT and social housing. (EIB)
  • UK government expected to borrow less in the short, but more in the long-term. UK’s fiscal watchdog revised borrowing in 2016-17 down by £8.4bn to £49.9bn, however, it expects borrowing will be cumulatively £29bn higher by 2021-22 compared to its March 2017 projection. Responsible are lower growth prospects and additional budget giveaways for home buyers and Brexit preparations. (OBR, Guardian)

Chart of the Week­

Mixed progress towards achieving EU Effort Sharing Decision (ESD) climate-policy targets

  • Overall, most EU countries are well on their way to achieve their ESD targets by 2020. At the same time, eight countries, among them France and Germany, have to step up their efforts to curb greenhouse gas emissions in ESD-covered sectors. The biggest drop in emissions is required in Ireland.
  • Big interstate differences in per capita ESD greenhouse gas emissions. Ireland, the worst polluter on a per capita basis, contributes 3.1 times more to greenhouse gases than Malta, which is at the other end of the spectrum. As in 2005, most of the countries with a higher GDP per capita contribute more to emissions, exceptions being Sweden and the Czech Republic.
  • Substantial interstate variation in changes in per capita emissions. The largest reduction (around 28%) took place in Greece, which outperformed its target by around 25%. The largest increase (around 34%) can be observed in Malta, where EDS greenhouse gases have been agreed to only rise by 5% by 2020.
  • ESD greenhouse gases concern emissions from most sectors not included in the EU’s Emissions Trading Scheme (EU ETS), such as transport, buildings, agriculture, and waste. The EU ETS covers around 45% of the EU’s greenhouse gas emissions. The EU target set at the Paris climate accord (covering both ESD and ETS) is an emission reduction of 40% by 2030, compared to 1990.

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