Following a strong economic growth of 2.4% in 2017, the EU economy has returned to rates closer to its long-term potential, with growth moderating since the beginning of 2018.
While this recent moderation has led business federations to revise their EU growth projections slightly down, expansion is projected to continue at a pace slightly above trend growth. We expect 2.2% EU growth for 2018 and 2.0% for 2019, a slight downward revision of -0.2 pp and -0.1 pp from our spring projections.
The danger of an escalating trade war is seen as a key risk for economic growth by BusinessEurope’s members. It could reduce global GDP by almost one percent in 2020. At the same time, digitalisation is rapidly increasing and the demand for digitally skilled technical workers is not met. As outlined in our in-depth analysis (see Box 1), whilst concerns about strong aggregate job losses due to digitalisation appear misplaced, it is essential that policy supports those workers whose jobs are displaced by technology in developing the skills necessary to find new jobs.