The EEAG Report on the European Economy 2015. Blurring the borders

On 24 February 2015, the European Economic Advisory Group at CESifo presented its fourteenth report 'Report on the European Economy' at a press conference in Brussels and at press conferences in major European cities.

The main sections comprise:

+ Macroeconomic Outlook
+ The European Energy Conundrum: Power Failure
+ European Regional Disparity: Borders Strike Back
+ Migration in the European Union: Too much of a good thing?

The world economy continued to recover in 2014 aided by strong growth in the United States. The situation in Europe, however, remains fragile. Several countries outside the euro area, particularly the United Kingdom, grew robustly. The performance of the euro area improved compared to 2013, but remains weak and uneven across member states. Unemployment is high in several countries, keeping social tensions at a high level. Depreciation of the euro is helping the economic recovery in general, but as international competitiveness varies greatly across the euro area, the positive effect of depreciation also differs from country to country. Despite the progress made in consolidating fiscal positions, high debt levels foreshadow future fiscal problems in some countries. Moreover, the outcome and impact of the reforms currently being implemented in several euro area countries are still uncertain. On balance, however, the reforms will support the recovery in 2015. This year’s EEAG report emphasises that tighter coordination of national policies is required to achieve desired objectives in some key areas; while a lack of coordination may turn out to be particularly costly both for individual countries and for the European Union as a whole.

Chapter 1 of the report discusses the immediate macroeconomic outlook for the global economy, with a particular focus on the European situation. Chapter 2 focuses on energy policy, and emphasises that the case for a genuine European energy union is even stronger than the case was for a monetary union in the 1980s and 1990s. Chapter 3 analyses the evolution of regional disparities in Europe, highlighting that both the decline and the recent increase in disparities were driven by uncoordinated national policies. Finally, Chapter 4 looks at the contentious issue of European migration. It highlights that a commitment to free mobility, a simultaneous commitment to a generous welfare state, and enlargement of the EU to include members much poorer than existing ones, creates problems and tensions.

European Economic Advisory Group at CESifo: EEAG Report on the European Economy (link to the latest edition) http://www.cesifo-group.org/eeag

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