Two years after Britain voted to leave the EU, the bloc is again going through a tumultuous time. EU leaders are at odds over immigration. A trade war with the US looms. And the shine has gone off the great success story of last year — resurgent growth in the eurozone — as the region’s economy has slowed.
But on many measures the EU has not been in such good shape in a decade. Here the FT looks at how the bloc is faring on the anniversary of the UK’s June 23 2016 decision to break away — nine months before Brexit becomes a reality.
More in employment
On one vital metric — jobs — the EU is doing better than it has since before the onset of the financial crisis.
In the first quarter of this year, the ratio of vacancies to total jobs in the bloc reached its highest level since Eurostat, the EU’s statistical arm, began compiling this data in 2008.
In addition, the EU’s unemployment rate fell to 7.1 per cent in April — the same level as in September 2007, just ahead of the crisis.
There are huge variations between countries. More than 15 per cent of the population is jobless in Spain and the figure is 20 per cent in Greece. But in both countries — the two EU states with the highest unemployment rates — joblessness has declined by about 10 percentage points from its post-crisis peak.
There are still big worries about such southern economies — notably high youth unemployment rates, problems with underemployment and people left outside the labour force.
Overall, however, the labour market in the EU is at its best in years.
Even wages are finally starting to pick up. This year, real wages per employee in the EU27 are expected to grow at their fastest pace for a decade, at the solid if unspectacular rate of around 1.2 per cent.
Growth is slowing down but is still strong
The EU enjoyed a robust year’s growth in 2017, growing at a clip of 0.7 per cent for the final quarter. This year, however, has been a different story: growth in the first three months of 2018 was a much slower 0.4 per cent.
The bloc’s economic prospects may also becoming a little more downbeat. In June, an average of economists’ forecasts for 2018 compiled by Consensus Economics was revised down to 2.1 per cent. In April the economists had expected an average of 2.25 per cent growth this year.
The causes of the slowdown are far from universally agreed, but the EU is coping with both the imminent demise of the European Central Bank’s €2.4tn asset purchase plan and the risk of trade wars in the era of Donald Trump.
Nonetheless, Pierre Moscovici, the EU’s commissioner for economic and financial affairs has trumpeted that the EU “strongest growth in a decade . . . is set to continue this year and next.”
All 28 EU economies are expected to benefit. This year is due to be only the second since the financial crisis — after 2017 — in which all member states have grown. While once there were big disparities between high performing countries such as Germany and laggards such as Greece, the variations in the rates of growth are now much less.
Public finances are on the mend
With the economy continuing to expand and interest rates that remain at historically low levels, EU public finances look better than they have since the crisis.
EU27 public debt, which in 2014 was 88 per cent, is falling and expected to reach 80 per cent this year, according to the European Commission. Taken together, the 27 countries’ fiscal deficits are expected to be 0.6 per cent of gross domestic product this year, compared with 4.1 per cent in 2011.
Only Romania is expected to run a deficit this year of more than the 3 per cent limit decreed by the EU.
It has taken years of responsible fiscal policies to bring EU countries to this point
The Commission says that the debt-to-GDP ratio will continue to decline, even for worrying cases such as Greece, Italy and Portugal, assuming that those countries’ economic policies do not change.
But now that a populist coalition government has taken power in Italy, that may be a dangerous assumption to make.
“It has taken years of responsible fiscal policies to bring EU countries to this point, and we must ensure that responsibility remains the name of the game in the future too,” Mr Moscovici said last month.
Immigration is still a big concern
As the EU economy has recovered, respondents in polls have begun to cite other worries more — principally concerns about immigration.
According to a spring 2018 report by Eurobarometer, which surveys public opinion on behalf of the European Commission, 38 per cent of the EU population considers immigration the biggest challenge the bloc faces.
This figure is considerably lower than it was during the peak of the asylum crisis in 2015 — when the number of migrants crossing the Mediterranean was more than 20 times the level of people making the journey in May this year.
But the proportion of people citing the economy as a concern has declined much more steadily, even as migration rises back up the political agenda.
The EU is seen more favourably
People are also now feeling better about the EU. Not since 2010 has a bigger proportion of the bloc’s population felt optimistic about its future.
The proportion of people who trust the bloc is at its highest level for eight years and outstrips trust in the national governments in all countries except Sweden, the Netherlands, Austria, Germany and, perhaps unsurprisingly, the soon-to-be departing UK.