BusinessEurope Economic Outlook Spring 2018 - EU growth at risk of peaking

Having enjoyed a strong growth of 2.4% in the EU in 2017 - the highest in more than a decade - businesses are increasingly concerned that growth is at risk of peaking. While the very cold winter may have impacted on lower growth being recorded in the first quarter of this year, we have also seen a broader fall in business confidence, suggesting more permanent factors may play a role.

Nevertheless, since the recent drop in confidence comes from very high levels and is for the moment still relatively small, and since strong underlying factors such as improving labour market conditions, a supportive global growth environment and still relatively accommodative monetary policy remain in place, we expect a GDP growth of 2.4% in the EU and 2.3% in the Euro-area for 2018. For 2019, we expect growth to slow down to 2.1% for both the EU and the Euro-area.

Still, business federations are increasing concerned about a shortage of relevant skills in the EU, which is increasingly acting as a constraint on their expansion plans. Risks to the outlook remain in particular in the form of a high level of policy uncertainty, with the danger of increasing protectionism. As outlined in our in-depth analysis box 1, studies from major international institutions all show the potential significant damage in terms of global growth in the event of a full trade war.

Individual country evaluations

Answers to this spring's questionnaire were received in May 2018.