Moderate growth for the Eurozone, GDP to rise in 2025

Brussels – The European recovery is facing challenges from the international environment as EU countries using the single currency strive to gain momentum in a tumultuous world that can produce both undesirable and contrary effects. Next week’s Eurogroup meeting (Nov. 4) will take stock of an economic situation that is nevertheless seen as favorable, at least so far. The widespread sentiment in Brussels and shared with capitals is that the Eurozone is back on a moderate growth path, in line with the outlook described by the Commission in its spring forecast.

EU sources acknowledge that, for sure, “the environment remains uncertain,” but, at the same time, the labor market remains strong, and Eurozone Gross Domestic Product “should return to growth next year driven by exports.” The European Commission will publish its new economic forecasts on November 15 and cannot provide significant previews. However, it should give a general overview, the contents of which have been anticipated by Economy Commissioner Paolo Gentiloni: growth is expected at 0.8 percent this year, which means, if growth expectations for GDP are rosy for 2025, abandoning the ‘zero point’ next year.

The debate also involves the issue of reforms, especially budgetary ones. It will be necessary to follow the new Stability Pact, with its more binding and clear objectives, and here concessions, at the moment, do not seem to be an option in the immediate future. After all, they reason in Brussels, “It would have been nice not to have fiscal challenges, but here we are, and, at the moment, I cannot imagine a strategy other than fiscal consolidation.” In short, it’s full speed ahead, restructuring national accounts, as agreed.

Then there is the banking union,  a matter still far from being closed. “The common safety net is missing,” the famous ‘backstop’ envisaged in the project to reduce risks from possible crises, the same EU sources point out. It is an implicit reminder to the Meloni government and Italy’s resistance, as it is the only country not to have ratified the European Stability Mechanism reform agreement (EMS), hindering the strengthening of the safety system for eurozone credit institutions.

No new pressures are expected on Economy Minister Giancarlo Giorgetti; if anything, clarifications are awaited from Germany on the Unicredit/Commerzbank case. Berlin is resisting the Italian bank’s approach to its German rival, with the Eurogroup observing but not getting involved. “It should not be a political choice. It is not a matter for governments but for industry regulators,” they confide in Brussels. It is up to the regulators to take action, and there is “confidence that these bodies will give clarity on the implications of the proposed transaction and the resulting decisions.”