European Commission (again) cuts GDP growth forecast for the European Union; Bank of England cuts UK GDP growth forecast; Germany forecast to grow slower than the UK despite Brexit

The European Commission slashed their GDP growth forecast for the European Union (excluding the United Kingdom) and the Eurozone for 2019 and 2020 citing slowing growth in China and weakening global trade.

The growth forecast for 2019 for the European Union (excluding the United Kingdom) was cut to 1.5% for 2019 (was previously forecast 2%) and for the Eurozone was cut to 1.3% (was previously forecast 1.9%).

Germany, Italy and the Netherlands all saw big downgrades for their growth outlook.

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Eurozone Q4 2018 GDP up by 0.2% and European Union Q4 2018 GDP up by 0.3%; 2018 annual GDP growth at 1.8% for the Eurozone and 1.9% for EU; Italy in Recession

Seasonally adjusted GDP rose by 0.2% in the Euro area or Eurozone (EA) and by 0.3% in the European Union (EU) during Q4 2018, compared with Q3 2018.

EU and Eurozone GDP up to Q4 2018
Source: Eurostat

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Europe’s aging population is set to cause huge economic challenges

We wrote about population percentage for each country by age last year. Here’s a map of population percentage for age 65 and above:

Japan has the highest percentage of over 65s at 26.56%. The other countries that make the top 25 countries for over 65s population are Italy, Germany, Portugal, Finland, Bulgaria, Greece, Sweden, Denmark, France, Croatia, Spain, Estonia, Austria, Malta, Lithuania, Czech Republic, Slovenia, Belgium, Netherlands, United Kingdom, Switzerland and Hungary all of which are in Europe.

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Some aviation statistics for the European Union

A record of over 1 billion air passengers travelled by air in the European Union in 2017. In 2017, 1.04 billion passengers travelled by air in the European Union (EU), up by 7% compared with 2016 and by 39% compared with 2009.

In 2017, intra-EU transport represented almost half (47%) of total air passenger transport in the EU and extra-EU transport over a third (36%), while national transport accounted for fewer than 1 in every 5 passengers (17%).

Air passenger traffic in the European Union 2017
Source: Eurostat

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Here’s how much European Union Member states spend on social protection as percentage of GDP

Social protection expenditure in the European Union (EU) stood at 28.2% of GDP in 2016. In 2016, the two main sources of funding of social protection at EU level were social contributions, making up 55% of total receipts, and general government contributions from taxes at 40%.

Social protection expenditure by European Union member state
Source: Eurostat

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Sweden’s first interest rate hike in seven years would put pressure on the European Central Bank to act

Sweden’s Central Bank, the Riksbank raised interest rates for the first time in seven years on Thursday which might cause further European monetary tightening. Riksbank’s benchmark repo rate was raised 25 bps from -0.5% earlier to -0.25%. It still remains negative though.

Sweden Repo Rate December 2018

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European Union Statistics for Total Debt to GDP, Banking Non-Performing Loans and Loan to Deposit Ratio

European Union Debt to GDP

European Union total debt (Debt of general governments and the private sector) as percentage of GDP is now over 300%. Ireland’s total debt to GDP is an eye watering 450%. A decade ago the EU total debt to GDP was 180%, the debt bubble is well and truly here.

EU deEU debt to GDP in each member country

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Eurozone and European Union trade stats for January to September 2018; EU trade surplus with the U.S. up 18% year on year as trade deficit with Russia up 38% year on year

In January to September 2018, Euro area or Eurozone exports of goods to the rest of the world rose to €1,686.0 bn (an increase of 3.6% compared with January to September 2017), while imports rose to €1,542.9 bn (an increase of 5.8% compared with January to September 2017). As a result, the euro area recorded a surplus of €143.1 bn, compared with +€169.2 bn in January-September 2017. Intra-euro area trade rose to €1,449.8 bn in January-September 2018, up by 5.7% compared with January-September 2017.

Euro Area trade until September 2018 graph
Source: Eurostat

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