On the other hand, unemployment will continue to fall in the Commission but at a slower pace than in the past, as employment growth can be negatively affected by rising labor shortages and slowing economic growth.
Unemployment in the euro area is expected to fall to 8.4% this year, to 7.9% in 2019 and to 7.5% in 2020. In the EU-27, the unemployment rate is estimated at 6.9 % this year and then drops to 6.6% in 2019 and to 6.3% in 2020. This will be the lowest unemployment rate since the monthly record of unemployment in January 2000.
Inflation is expected to remain at moderate levels, in particular to rise to 1.8% in 2018 and 2019 and to fall to 1.6% in 2020. In terms of public finances, the level of debt is decreasing and the deficit global public in the euro area is currently less than 1%.
It is estimated that the public deficit in the euro area will continue to decline in relation to GDP this year due to low interest costs. This downward trend is expected to end next year, for the first time in 2009, as a slight increase in the fiscal stance is expected in 2019, before it is generally neutral in 2020. The general government deficit is expected to rise 0 , 6% of GDP in 2018 to 0.8% in 2019 and will fall to 0.7% in 2020. It is estimated that the public deficit in the EU-27 will increase from 0.6% of GDP in 2018 to 0, 8% in 2019 and declining to 0.6% in 2020. Overall, one of the most significant improvements is expected compared to ten years ago in 2009 when the deficit reached a maximum of 6.2% in the euro area and 6.6% in the EU.
It is estimated that the debt-to-GDP ratio will continue to decline in the euro area and in almost all Member States due to continued growth and primary surpluses contributing to debt reduction. In the euro area, the government debt / GDP ratio is projected to decline from 86.9% in 2018 to 84.9% in 2019 and 82.8% in 2020, down from the highest level of 94.2% in 2014. In the EU-27, the government debt ratio is projected to fall from 80.6% of GDP in 2018 to 78.6% in 2019 and to 76.7% in 2020.
However, as the Commission points out in its communication, these forecasts are characterized by a high degree of uncertainty and there are many interdependent risks of more serious developments. The manifestation of any of these risks could reinforce others and maximize their impact.
The overheating of the US economy, fueled by pro-cyclical fiscal stimulus measures, could lead to a faster rise in interest rates than expected, which would have many negative effects across the US, especially in emerging markets vulnerable to changes in capital inflows and exposure to debts denominated in US dollars. This situation could lead to an intensification of tensions in the financial markets. The EU could also be affected by its strong commercial ties and the exposure of banks.
In addition, the projected increase in the US current account deficit could generate additional tensions in trade with China, thus increasing the risk of inappropriate behavior in China, given the level of corporate debt and financial instability. Increasing trade pressures could also affect the EU by their impact on confidence and investment and the high degree of Union integration into global value chains.
Within the EU, doubts about the quality and sustainability of public finances in heavily indebted Member States could be extended to domestic banking sectors, which would raise fears about financial stability and hamper economic activity.
Finally, there are still risks associated with the outcome of the Brexit negotiations.
Regarding the current Commission assessments, Valdis Domobrovski, Vice-President of the Commission and Commissioner for the Euro and Social Dialogue as well as Financial Stability, Financial Services and the Capital Markets Market, said: "All EU economies are expected to grow this year and next year, which will create more jobs. However, the uncertainty and the risks, both external and internal, rise and start to reduce the pace of economic activity. on the contrary, to step up our efforts to strengthen the resilience of our economies. At EU level, we need to take tangible decisions to further strengthen the Economic and Monetary Union. At national level, the need to accumulate tax reserves and reduce debt is also more urgent, while ensuring that the benefits of growth are also r among the most vulnerable members of society. "
And Pierre Moscovis, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "The European economy is showing resilience and rising at a slower pace. This trend is expected to continue for the next two years as unemployment continues to decline to levels that have not been seen since the crisis, and euro area public debt is expected to continue downward, with the deficit remaining well below 1% of GDP. uncertain political leaders in both Brussels and national capitals must make every effort to ensure that the eurozone is strong enough to deal effectively with potential future challenges. "