Press Release: Commission presents Spring 2001 EU Economic Forecasts (2001-2002)

Average economic growth in the EU in 2000 was one of the best in many years. However, the increase in the price of oil eroded the purchasing power of households and private consumption decelerated towards the end of that year. Now the EU economy is faced with the abrupt economic slowdown in the US and the consequences will be felt. They are expected to remain limited thanks to resilient domestic demand and because the weakness of US economic activity should be short-lived. Growth in the EU has been revised down to 2.8% on average in 2001, but is expected to increase in the second half of this year underpinned by sustained job creation. Inflation in the euro area will be above 2% for a longish period, but next year it will dip again below the ECB's price stability objective. Public finance consolidation continues in most Member States, but at the level of the EU, budgetary policy is mildly expansionary due to large tax cuts in a few countries.