Business Lobby Sees Moderate 2010 Growth For Eurozone

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Monday, Europe's top business lobby predicted that the Eurozone economy would grow 1.2% in 2010 following a fall of 4% in 2009.

However, BusinessEurope, which represents more than 20 million small, medium and large companies in Europe, said the situation is still 'fragile and uncertain'. It cautioned that a sustained recovery momentum is still some distance away and several member states are expected to see a further contraction of economic activity in 2010.

The group warned that public indebtedness will continue to rise. It will reach an average of 80% of GDP this year at EU level. Governments must rapidly restore trust in the sustainability of their public finances, it urged. "To sustain growth and job creation, it is vital that European governments restore the viability of public finances and implement far-reaching reforms," said Philippe de Buck, Director General of BusinessEurope.

Speculative attacks must be dealt with, including through targeted commitments by EU institutions to collectively preserve fiscal and financial stability, the lobby said. But, it does not see this as a substitute for the necessary adjustment at the national level. Fiscal imbalances must be addressed with credible and decisive actions by the governments themselves, backed by strict surveillance by the Commission and the Council, the group added.

BusinessEurope forecast euro area inflation to rise to 1.2% in 2010, up from 0.3% in 2009. The jobless rate would probably peak to 10.8% from 9.4%. Private consumption is expected to grow at a moderate pace of 0.3%. The region's exports may recover with 4.7% rise following a 13.4% decline in 2009.

Further, the group sees 1.2% growth in EU27 in 2010, following the 4.1% contraction in 2009. Inflation forecast for the region is at 1.5% in 2010, up from 0.8% in 2009. The rate of unemployment is predicted to rise to 10.2% from 8.9%. Exports are expected to rise 4.2%.

According to BusinessEurope's forecasts for individual nations, the German economy would grow by 1.8%, the U.K. by 1.2%, France by 2% and Italy would expand 1.1%. Spain is likely to remain in recession with the economy contracting at an expected pace of 0.6%.

(Market News Provided by RTTNews)