2nd ET 2050 TPG meeting Brussels, March 19-20 2012

1. 2nd ET 2050 TPG meeting Brussels, March 19-20 2012 Sectoral Reports Economy Polimi RU

2. A mix of large and small countries Share of Espon space total GDP at market prices by country at 1 January 2010 Share of Espon space total population by country at 1 January 2010

3. Persisting income and unemployment disparities Income per capita (as % of EU mean in 2010) Unemployment rates (september 2011)

4. The quest for GDP growth European long-run growth lower than US, larger than Japan Strong effects of the economic crisis Eastern countries with higher growth rate before the crisis Eastern countries feeling less and later the crisis (on average) Significant differences between countries

5. Employment and unemployment Slow but steady increase of employment rates (especially female) Decrease of unemployment rates before the crisis Convergence of female unemployment rates to the male one Divergence of youth unemployment rates (young people felt more strongly the crisis)

6. An increasingly open economy Increasing Exports on GDP Increasing Imports of GDP Positive and relatively stable Trade Balance of the European Union

7. Important changes in trade partners Trade partners of EU27 (imports) Trade partners of EU27 (exports)

8. The most important trade partners (in terms of balance) Largest positive trade balance with: United States Mediterranean Basin Countries Candidate countries United Arab Emirates Largest negative trade balance with China Russia (Norway) Lybia Japan

9. Other stylized facts on European trade and FDI • Relatively stable European export specialization • Increasing weight on imports of Mineral fuels, lubricants and related materials • Decreasing weight on imports of Machinery and transport equipment • Decreasing share of Europe on World inward FDI 2000: 50% of World FDI 2007: 43% of World FDI 2010: 25% of World FDI

10. Exchange rates Recent real revaluation in most countries Strong real revaluation in New 12 countries Revaluating and devaluating countries in real terms within the Euro area Still strong Euro

11. Public finance Slight decrease of public debt on GDP prior to the crisis Marked increase of public debt with the crisis Lower debt in most Eastern countries Significant net borrowing in most countries Still low interest rates on debt

12. Persistent regional disparities and dualisms

13. Concluding remarks: the main challenges to the European Economy • Dealing with the economic crisis and raising the growth rate • Dealing with World-wide competition without abjuring the European labour market model and welfare state • Building a more innovative economy • Dealing with an aging population and workforce • Dealing with stretched public finances

14. Concluding remarks: the main challenges to the European Economy • Dealing with lower demand • Dealing with a different competition from rising powers • Establishing an energy efficient economy • Dealing with the challenges of global warming • Dealing with internal income disparities