DAILY NEWS
Brussels, 15 November 2024
CALENDAR
Monday 18 November
Mr Margaritis Schinas in Madrid, Spain (until 19/11): delivers opening remarks at the Madrid Investment Forum; participates in the XLI Edition of the Francisco Cerecedo Award.
Tuesday 19 November
Mr Margaritis Schinas in Madrid, Spain: participates in an exchange with students at the Carlos III University.
Ms Stella Kyriakides attends the Politico Healthcare Summit.
Wednesday 20 November
Ms Stella Kyriakides attends the European Cancer Summit.
Autumn 2024 Economic Forecast: A gradual rebound in an adverse environment
After a prolonged period of stagnation, the EU economy is returning to modest growth, while the disinflation process continues. The European Commission's Autumn Forecast projects GDP growth in 2024 at 0.9% in the EU and 0.8% in the euro area. Economic activity is forecast to accelerate to 1.5% in the EU and to 1.3% in the euro area in 2025, and to 1.8% in the EU and 1.6% in the euro area in 2026.
Headline inflation in the euro area is set to more than halve in 2024, from 5.4% in 2023 to 2.4%, before easing more gradually to 2.1% in 2025 and 1.9% in 2026. In the EU, the disinflation process is projected to be even sharper in 2024, with headline inflation falling to 2.6%, from 6.4% in 2023, and to continue easing to 2.4% in 2025 and 2.0% in 2026.
Growth to accelerate as consumption picks up and investment rebounds
After resuming growth in the first quarter of 2024, the EU economy continued to expand throughout the second and third quarters at a steady, albeit subdued, pace.
Employment growth and recovery in real wages continued to support disposable incomes, but household consumption was restrained. A still high cost of living and increased uncertainty following the repeated exposure to extreme shocks, compounded with financial incentives to save in a context of high interest rates, led households to save an increasing share of their income. At the same time, investment disappointed, with a deep and broad-based contraction across most Member States and asset categories in the first half of 2024.
The restraint to consumption appears to be loosening. As the purchasing power of wages gradually recovers and interest rates decline, consumption is set to expand further. Investment is expected to rebound on the back of strong corporate balance sheets, recovering profits, and improving credit conditions. The impulse of the Recovery and Resilience Facility and other EU funds will also drive an increase in public investment over the forecast horizon.
Overall, domestic demand is projected to drive economic growth going forward. In 2025 and 2026, exports and imports are expected to grow at broadly the same pace, implying a neutral contribution to growth by net trade.
The disinflationary process continues
The disinflationary process that started towards end-2022 continues despite a slight pick-up in inflation in October, largely driven by energy prices.
Price pressures in services remain high, but are projected to moderate as from early 2025, driven by slowing wage growth and an expected pick-up in productivity, and supported by negative base effects. This sets the stage for inflation to fall towards target in late 2025 in the euro area and in 2026 in the EU.
Labour market remains strong, with record-low unemployment
The EU labour market held up well in the first half of 2024 and is expected to remain strong. Employment growth in the EU is set to continue, although at a slower pace, from 0.8% in 2024 (0.9% in the euro area) to 0.5% in 2026 (0.6% in the euro area).
In October, the EU unemployment rate reached a new historical low of 5.9%. In 2024 as a whole it is projected to stand at 6.1% (6.5% in the euro area) and to edge further down thereafter, reaching 5.9% in 2025 and 2026 (6.3% in the euro area).
Declining deficits on the back of fiscal consolidation
As many Member States work to lower their debt ratios, the EU general government deficit is set to decline in 2024 by around 0.4 pps., to 3.1% of GDP, and to 3.0% in 2025. In 2026, the positive economic momentum is projected to reduce the deficit further to 2.9%. In the euro area, the deficit is forecast to decrease from 3.0% in 2024 to 2.9% in 2025 and 2.8% in 2026.
The aggregate debt-to-GDP ratio of the EU is, however, projected to edge up, from 82.1% in 2023 to 83.4% in 2026. This follows an almost 10 pps. decrease between 2020 and 2023, and reflects the effect of still elevated primary deficits and rising interest expenditure, that are no longer offset by high nominal GDP growth as inflation eases. In the euro area, government debt is forecast to rise from 88.9% of GDP in 2023 to 90% in 2026.
Uncertainty and risks increase
Uncertainty and downside risks to the outlook have increased. Russia's protracted war of aggression against Ukraine and the intensified conflict in the Middle East fuel geopolitical risks and risks to energy security. A further increase in protectionist measures by trading partners could upend global trade, weighing on the EU's highly open economy.
On the domestic front, policy uncertainty and structural challenges in the manufacturing sector could entail further losses of competitiveness and weigh on growth and the labour market. Moreover, delays in the implementation of the RRF or a stronger than expected impact from fiscal consolidation could further dampen the resumption of growth. Finally, the recent floods in Spain illustrate the dramatic consequences that the increasing frequency and scope of natural hazards can have not only for the environment and the people affected, but also for the economy.
Background
This forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 31 October. For all other incoming data, including assumptions about government policies, this forecast takes into consideration information up until, and including, 25 October. Unless new policies are announced and specified in adequate detail, the projections assume no policy changes.
The European Commission publishes two comprehensive forecasts (spring and autumn) each year, covering a broad range of macroeconomic and fiscal variables for all EU Member States, candidate countries, EFTA countries and other major advanced and emerging market economies.
Full document: Autumn 2024 Economic Forecast
Quote(s)
“With the EU economy steadily recovering, growth should pick up more speed next year with rising consumption, thanks to increased purchasing power and still record-low unemployment, and an expected improvement in investment levels. Still, given today’s high geopolitical uncertainty and many risks, we cannot afford to be complacent. We need to deal with longstanding structural challenges, raise productivity and make sure that the wider EU economy stays globally competitive. It is vital for Member States to carry out all reforms and investments in their Recovery and Resilience Plans and reduce public debt levels in line with the new fiscal rules.”
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People
“The European economy is slowly recovering. As inflation continues to ease and private consumption and investment growth pick up, with unemployment at record lows, growth is set to gradually accelerate over the next two years. However, structural challenges and geopolitical uncertainty weigh on our future prospects. Member States will have to walk a narrow path of bringing down debt levels while supporting growth, aided by the new economic governance framework and the continued implementation of NextGenerationEU. Looking ahead, strengthening our competitiveness through investments and structural reforms is crucial to lift potential growth and navigate rising geopolitical risks.”
Paolo Gentiloni, Commissioner for Economy
Economic forecast for Cyprus
The latest macroeconomic forecast for Cyprus.
Cyprus’ growth is expected to remain robust in 2025 and 2026. Inflation is projected to decelerate and wage growth to stay high, boosting household purchasing power and consumption. The government budget balance is set to remain in surplus, supported by continued strong growth in revenue and moderate increases in expenditure.
Indicators
2024
2025
2026
GDP growth (%, yoy)
3,6
2,8
2,5
Inflation (%, yoy)
2,2
2,1
2,0
Unemployment (%)
4,9
4,7
4,5
General government balance (% of GDP)
3,5
2,7
Gross public debt (% of GDP)
66,4
61,4
56,7
Current account balance (% of GDP)
-9,2
-8,4
-8,2
Growth momentum to continue
Real GDP growth was resilient in the first half of 2024, expanding by 3.6% y-o-y. This was primarily driven by private consumption, which increased by 4.5%. Investment, excluding the volatile registration of ships and aircraft, grew by 4.8% y-o-y, supported by a positive sentiment in the construction sector. Strong foreign demand for services, particularly in sea transport and tourism, led to a solid export performance. For 2024 as a whole, growth is projected at 3.6%.
This positive momentum is expected to continue, with economic growth forecast at 2.8% in 2025, and 2.5% in 2026. Investment is set to keep benefitting from the funds of the Recovery and Resilience Facility, and easing financial conditions are expected to provide a further stimulus. Export performance is projected to continue to benefit from growing tourist receipts and a dynamic outlook for services, particularly related to ICT. The ongoing recovery in household purchasing power due to an increase in nominal wages and declining inflation, is expected to boost private consumption.
HICP inflation is expected to converge to 2.0% over the forecast horizon, reflecting a gradual easing of base effects in particular for food, and declines in domestic energy prices. Services inflation is expected to remain elevated, mainly due to high nominal wage growth and increasing demand especially for tourism.
The current account deficit remains elevated but is projected to decline, to reach 8.2% of GDP in 2026. This declining trend is set to be supported by strong tourism flows and sustained improvements in the trade balance, despite persistently high net outflows of primary income resulting from the repatriation of profits by foreign-owned corporations.
Downside risks to the outlook persist. Ongoing tensions in the Middle East could disrupt supply chains and increase production costs. The tourism sector, a key contributor to the external balance, remains vulnerable to those risks. Additionally, energy prices pose a threat due to Cyprus's high oil dependence and limited integration with the European electricity market.
Solid fundamentals to support employment growth
Employment grew by 2.7% y-o-y in the first half of 2024, reflecting increased hiring in tourism and the public sector. Over the same period, the unemployment rate fell by one pp., reaching 4.9% by the end of the second quarter. This is the lowest level in the last 15 years. Skills mismatches and labour market slack remain limited, partly due to the influx of foreign workers benefiting from the incentives provided under the government’s initiative to attract multinational business to set up their base on Cyprus (headquartering). Employment is projected to grow by 1.9% in 2024, with a slight moderation at 1.2% by 2026. The unemployment rate is, projected to decline further and reach 4.5% in 2026.
Positive fiscal outlook
The government surplus is expected to remain solid over the forecast horizon. In 2024, the surplus is projected at 3.5% of GDP in 2024, up from 2% in 2023. The budget balance of 2023 includes the temporary negative impact of 1.1% of GDP from the statistical treatment of some retroactive payment to civil servants’ pension fund, which is eliminated in 2024. Further improvements of the 2024 surplus are stemming from revenue growth which is set to outpace the increasing expenditure throughout the year. Improved labour market conditions and higher contribution rates for employers and employees as of January 2024 contribute to increasing budget revenue from social security contributions. Higher receipts from corporate income tax, personal income tax and VAT are also expected to boost tax revenue, which is forecast to increase by around 11% overall. Public wage expenditure is projected to grow by more than 11%, primarily due to inflation indexation and higher social contribution rates for civil servants. Public investment is expected to remain high as RRP projects are maturing and other EU funds of 2021-2027 programming period are gaining speed. Investment financed by national state budget is expected to somewhat decrease.
The budget surplus is forecast to remain but to be lower at 2.7% of GDP in 2025 and 2026, as tax revenue increases are set to moderate in line with incomes and consumption and collection of tax arrears is assumed to flatten. At the same time, ad hoc increases in public wages adopted at the end of 2024 and measures to support housing are expected to be the main drivers of the growing expenditure in 2025.
The government debt-to-GDP ratio was at 73.6% in 2023. This figure was revised down by around 4 pps after the benchmark update of nominal GDP for the period 1995-2023. The revision incorporates statistical and methodological changes that had a level-shift impact on the entire forecast profile The debt-to-GDP ratio is expected to continue declining to 66.4% of GDP in 2024 and to 56.7% in 2026, largely due to primary surpluses and continued strong nominal GDP growth.
Risks to fiscal outlook arise mainly from implementation challenges of some large investment projects, such as the construction of a liquified natural gas terminal, that may burden public budget through called guarantees and other claims. Positive developments may include continued improvements in tax administration and collection of tax arrears
Spring 2024 Economic Forecast: A gradual expansion amid high geopolitical risks
European Economic Forecast. Autumn 2024 - Cyprus
Statement by Commissioner Kyriakides ahead of European Antibiotic Awareness Day
As we approach European Antibiotic Awareness Day on 18 November, we must continue to draw attention to the urgent threat of antimicrobial resistance (AMR). This year's theme of “Antimicrobial resistance is invisible; I am not” is very timely, as it emphasises the urgency to step up our actions to address the profound human cost of AMR on patients, families, and healthcare systems across Europe.
AMR is one of the biggest health threats of our times, with an unacceptably high human cost: it is responsible for roughly 35,000 deaths every year in the EU/EEA, and without urgent action, could cause almost 40 million deaths worldwide by 2050. AMR's economic cost for the world is equally daunting, as it could result in losses of €1.6 trillion in global annual GDP by 2050, unless we step up our response.
The EU is taking decisive steps to address AMR. Last year, we set clear targets to help Member States to reduce AMR by 2030, and our EU4Health programme financially supports them in implementing critical policies to combat this threat. We have increased our support for research to counteract AMR, and we have proposed incentives to encourage the development of much-needed new antibiotics in our pharmaceutical reform.
On the international stage, we are leading efforts for a UN commitment to reduce global AMR-related deaths by 10% by 2030. It is essential that we build on the political will and momentum we witnessed in New York at the UN General Assembly this past September. Only through global cooperation and commitment can we truly make a difference for citizens around the world, and the EU is committed to playing its full part.
These decisive actions are at the heart of the EU's One Health policy, which sets stringent limits on antibiotics in our agriculture and food chain, supports innovation in veterinary medicine, and supports new ways of monitoring antibiotic residues in our environment.
The fight against AMR is not only a matter of policy and investments, crucial as they are. Each one of us also has a role to play in fighting AMR. This includes the responsible use – for ourselves and our children - of antibiotics as well as basic hygiene and infection prevention measures. Together, by raising awareness and making informed choices, each and every one of us can help reduce the rise and impact of AMR.
Let us continue to work together across sectors and countries, to preserve the effectiveness of antibiotics for future generations while protecting the health of citizens worldwide.
Commission announces winners of the 2024 Excellence in Road Safety Awards
Yesterday, the Commission announced the winners of its 2024 Excellence in Road Safety Awards, recognising outstanding and innovative contributions to road safety across Europe. Each year, the awards honour the most exceptional contributions from the European Road Safety Charter's community - organisations, authorities, and companies - that have made a significant impact on road safety across Europe. This year, the chosen projects fall under the following five categories: education, motorcycling, vulnerable road users, technology and innovation, and urban road safety.
The 2024 winners are:
European Transport Safety Council (ETSC), Europe, for its LEARN! Project, advancing traffic safety and mobility education in Europe.
Kuratorium für Verkehrssicherheit, Austria, for its pioneering road safety initiative, which has reduced motorcycle crashes and improved road safety by road markings on bends.
Axencia Galega de Infraestruturas, Spain, for its innovative approach to promoting alternative mobility in Galicia through the creation of walking and cycling paths, connecting interurban areas as part of Galicia's alternative mobility strategy.
Center for Traffic Management Bavaria, Germany, for its cutting-edge traffic management systems, like the ‘Traffic lights of the future,' to improve traffic safety and flow.
Municipality of Bologna, Italy – for the ‘Bologna City 30' initiative, focusing on low-speed zones, pedestrian and cycling areas as well as public awareness campaigns on road safety.
The European Road Safety Charter, led by the European Commission, is the largest civil society platform on road safety, with around 4,100 members dedicated to improving road safety in Europe. These efforts are needed to achieve the EU's ‘Vision Zero' - zero road fatalities and serious injuries by 2050 target, especially since progress amongst Member States has stalled, with 20,400 road deaths recorded in 2023 alone, and many EU countries falling behind on this objective.
More information is available here.
(For more information: Adalbert Jahnz – Tel.: +32 2 295 31 56; Anna Wartberger – Tel.: +32 2 298 25 04)
Commission fines Meta €797.72 million over abusive practices benefitting Facebook Marketplace
The European Commission has fined Meta €797.72 million for breaching EU antitrust rules by tying its online classified ads service Facebook Marketplace to its personal social network Facebook and by imposing unfair trading conditions on other online classified ads service providers.
The Commission's investigation found that Meta is dominant in the market for personal social networks, which is at least European Economic Area (‘EEA') wide, as well as in the national markets for online display advertising on social media. In particular, the Commission found that Meta abused its dominant positions in breach of Article 102 of the Treaty on the Functioning of the European Union (‘TFEU') by: (i) tying its online classified ads service Facebook Marketplace to its personal social network Facebook; and (ii) unilaterally imposing unfair trading conditions on other online classified ads service providers who advertise on Meta's platforms, in particular on its very popular social networks Facebook and Instagram.
The Commission has ordered Meta to bring the conduct effectively to an end, and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.
Executive Vice-President Vestager, in charge of competition policy, said: “Today we fine Meta €797.72 million for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms. Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers. It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules. Meta must now stop this behaviour.“
A press release is available online.
(For more information : Lea Zuber – Tel.: +32 2 295 62 98; Sara Simonini - Tel.: +32 2 298 33 67)
Statement by Vice-President Jourová and Commissioners Schmit and Dalli on the occasion of the European Equal Pay Day*
Women in the European Union still continue to earn less than men, with the average gender pay gap in the EU standing at about 13%, for the third year in a row. This means that for every €1 a man earns, a woman makes €0.87. This gender pay gap equals to a difference of around one month and a half of salary per year. Considering this loss of income, European Equal Pay Day – falling on 15 November this year marks the day from which women in the EU will symbolically start ‘working for free' for the rest of the year. It is a symbolical day dedicated to raising awareness to the gender pay gap.
Ahead of this day, Věra Jourová, Vice-President for Values and Transparency, Nicolas Schmit, Commissioner for Jobs and Social Rights, and Helena Dalli, Commissioner for Equality, have issued the following statement:
“On the 2024 European Equal Pay Day, we reaffirm our commitment to build a Europe where women and girls can thrive and where their contributions to the labour market are fully valued. Guided by the EU's Gender Equality Strategy, we have made strides toward closing gender disparities. Indeed, in the past five years, women's employment has risen by 2.9 percentage points and the gender pay gap has declined by 1.5 percentage points.
Nonetheless, significant barriers remain in terms of care options and structures available to balance professional and personal commitments. With 90% of the formal care workforce comprised of women and 7.7 million women out of employment due to insufficient care services, the Commission urges Member States to invest in high-quality, affordable, and accessible care, as outlined in the European Care Strategy. Increasing support in this sector will not only enhance women's participation in the labour market but will also strengthen Europe's economic resilience.
Our labour market remains gender-segregated, with women largely represented in lower-paying sectors such as caregiving, where part-time roles often dominate. This is not simply a matter of choice, but the result of societal pressures and inequalities. Career interruptions and reduced work hours, especially following maternity, continue to compromise women's long-term financial situation. From the outset of this mandate, we have tackled these entrenched inequalities across employment, care, pay, and pensions.
We now call on Member States to ensure the full implementation of the Pay Transparency Directive, which will advance pay transparency for jobseekers, provide employees with the right to pay information, require reporting on the gender pay gap, and introduce joint pay assessments. Through the EU Directive on adequate minimum wages, we support gender equality by aiming to reduce the gender pay gap and lift women out of poverty, as women disproportionately earn minimum wages in Europe.
As President von der Leyen announced, next year the Commission will present a Roadmap for Women's Rights, setting out a long-term vision for the full realisation of women's rights and key gender equality principles in the EU. This is also reaffirmed in our commitment to integrating a gender mainstreaming perspective into all policies.”
EU initiatives on equal pay
The Gender Equality Strategy 2020-2025 published in March 2020, presented policy objectives and actions to move towards a gender-equal Europe. During this mandate, the Commission made significant progress on gender equality policies, including by adopting several pieces of landmark legislation for the empowerment and protection of women.
In December 2022, the directive on gender balance on company boards came into force. The deadline for the transposition of the directive is 28 December 2024. By this date, the Directive should be fully implemented into national legislation and notified to the Commission.
In June 2023, the Directive on Pay Transparency measures entered into force. The rules provide for transparency and effective enforcement of the principle of equal pay between women and men, as well as improve access to justice for the victims of pay discrimination.
In October 2022, the EU Directive on adequate minimum wages was adopted to promote adequate minimum wages allowing workers in the Union for a decent living wherever they work. Member States are required to incorporate these new rules into their national law by tomorrow, 15 November.
In September 2022, the Commission presented the European Care Strategy to ensure quality, affordable and accessible care services across the European Union. The Strategy is accompanied by two Recommendations for Member States on the revision of the Barcelona targets on early childhood education and care, and on access to affordable high-quality long-term care.
By August 2022, Member States had to transpose the Directive on work-life balance , to address women's underrepresentation in the labour market and the unequal sharing of care responsibilities between men and women by improving the work-life balance of working parents and carers.
In June 2024, the Commission published the 2024 Pension Adequacy Report that analyses how the inequalities in pay, care breaks and part-time work during working life translate into the gender pension gap, with women's pensions still 25% lower than men's.
Throughout 2023, the European Commission ran a communication campaign to challenge gender stereotypes. The #EndGenderStereotypes campaign targeted young adults mostly on social media, but also through influencers and media outreach. The campaign tackled gender stereotypes in different areas of life, such as career choices, sharing care responsibilities and decision-making.
Nine out of ten Europeans – women and men - think that it is unacceptable that women are paid less than men for the same work or work of equal value. The majority of European workers are in favour of the publication of average wages by job type and gender at their company.
Pay disparities are largely influenced by persistence of gender stereotypes. Women and girls tend to follow career paths that are often less well-paid and to shoulder most of the burden of household and childcare responsibilities between parents. As a consequence, they face bigger challenges in balancing work and personal life sometimes to the point of being discouraged from pursuing careers. This is compounded by a lack of adequate care facilities for children, the elderly, and individuals with disabilities. An estimated 7.7 million women are not in paid work due to care responsibilities.
For More Information
Webpage on Gender pay gap
Webpage on Equal Pay Day
Webpage on Adequate minimum wages
Webpage on EU action for equal pay
European Institute for Gender Equality - Gender Equality Index
*Updated on 15/11/2024 at 11:45
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Athanasios ATHANASIOU
Press Officer / Political Reporter
European Commission
Representation in Cyprus
EU House, 30 Vyronos Avenue, 1096 Nicosia
Tel: +357 22 81 75 76 Mob: +357 99 363753
Twitter: @aathans