Nearly nine years after the outburst of the financial crisis, the European economy’s recovery remains ‘elusive’ and unable to significantly reduce unemployment or resorb growing inequalities, according to the independent Annual Growth Survey (iAGS)* published today.

In their report, the experts predict that the economic growth in the EU will slow down in 2017 and 2018 with GDP reaching 1.6% and 1.5% respectively against 1.6% in 2016.

To improve Europe's economic prospects, the experts recommend a more expansive fiscal policy based in particular on a golden rule for public investment and a modified expenditure rule. They argue that the aggregate fiscal stance for the euro area would be neutral in 2017 if economic policy is conducted only on the basis of the rules of the Stability and Growth Pact. To strengthen growth, the EU and member states need to step up public investments.

The report also highlights that ‘a growth-oriented economic policy’ is necessary but not sufficient to obtain social progress and individual well-being. Policy makers need to move beyond the predominant, narrow focus on GDP growth and aim instead at a broader set of economic, social and environmental targets.

S&D Group vice-president responsible for economic and monetary affairs, Maria João Rodrigues, said:

“The 2017 iAGS confirms that stronger public investment can play a decisive role in increasing employment and improving the well-being of our citizens.

“We welcome the efforts which the European Commission has shown last week to adapt the economic policy to Europe's real economic and social needs. The Commission has actually followed what our iAGS experts and S&D parliamentarians have been arguing for a long time: the euro area is one big economy and it needs to define a common budgetary position that supports growth and ensures healthy public finances.

“It will be much easier for Europe to reduce previous public and private debts if we achieve higher growth. But for this we need to have higher investment and more action to tackle social inequalities.”