ECB pessimistisch over EU-economie op langere termijn (en)

The European Central Bank (ECB) has warned of lower long-term growth in the Eurozone, while France has indicated its deficit will remain within the limits imposed by the EU's stability pact.

Research by the ECB has revealed that the bank's earlier long-term growth projections for the Eurozone, predicting growth between 2 and 2.5 percent, have been too optimistic.

The ECB figures concern long term growth, meaning "potential" growth over periods of several years independent from short-term cycles in the economy and inflationary pressures.

According to the FT, it emerged on Monday (5 September) that long-term growth in the Eurozone lies no higher than 2 percent - and possibly even below that.

The ECB primarily blames demographic factors for the shift in its growth projections.

While European populations have continued to grow older, participation of several groups in the labour force has been disappointing - sparking sluggish productivity growth.

The bank sees its changed forecasts as a call upon governments in the Eurozone to step up structural reforms in their economies, particularly in their labour market, the FT notes.

Long-term growth projections in the UK, which is outside the Eurozone, lie at just below 3 percent, while the "potential" growth in the US is even higher - at 3 percent or more.

French economy and deficit

Meanwhile, in France, one key Eurozone economy, the public is looking pessimistically at economic prospects in the shorter term.

FT Deutschland reports that according to a survey conducted by French paper La Tribune, over two thirds of French people have indicated they expect no improvement in economic conditions in the coming six months.

However, some positive news also emerged from Paris yesterday as the government informed the European Commission this year it is set to comply for the first time since 2001 with the EU's stability and growth pact - the rules underpinning the euro.

Paris informed the European Commission that its budget deficit for 2005 will stand at 3 percent - exactly the maximum as set out in the stability pact's rules.

The new French figure means a slight change to earlier projections by Paris, which had put the government deficit at 2.9 percent.

However, Le Figaro notes that Paris is at the same time drifting away from fulfilling another criteria in the pact - the maximum government debt percentage of 60 percent of GDP.

Government debt will stand at 66.2 percent of GDP this year, instead of 64.7 percent in 2004.