12.11.2021
Among the key points we note:
- The EU economy is undergoing a strong recovery, but rapid price increases and bottlenecks in global supply chains are threatening to blunt the upturn. We project the EU27 economy to grow by 4.8% this year, followed by 4.3% next year.
- Bottleneck and supply side constraints are pushing up prices throughout the global and EU economy. Energy prices, in particular, are now 7% above the January 2020 level, accounting for half of the 3.4% HICP rise in September.
It is of crucial importance that policymakers take a prudent course of action at this juncture where European business is under unprecedented strain. In particular, we highlight the importance of the following:
- Wage moderation will be important in ensuring that temporary price rises do not give rise to a damaging wage-price spiral, forcing both a premature withdrawal of monetary policy support, and risking damaging Europe’s global competitiveness and causing permanently higher inflation.
- Full implementation of Member States’ Recovery and Resilience plans, including ambitious, growth-enhancing reforms, is essential to support both growth and sustainable finances.
- Renewed efforts to support vaccinations, particularly in Member States with relatively low rates, are required to reduce the risk of an increase in hospitalisation rates leading to a return of restrictions on activity.
See the full text HERE
