Articles on the economy
Defence spending is expected to increase significantly in the euro area in the coming years. Until now, euro area defence spending has mainly consisted of consumption expenditure, such as personnel costs. Growth effects would likely remain temporary and would support a number of specific manufacturing industries.
Since the global financial crisis, investment has grown more slowly in the euro area than in the United States or the United Kingdom. There is no lack of savings in the euro area, but there are not enough attractive investment opportunities.
Employment has grown strongly in the euro area since 2020. This has been attributable to both demand and supply factors. In the near future, population ageing will reduce the supply of labour in the euro area. The impact of population ageing will nevertheless be softened by a rise in the labour force participation rate, work-based immigration and a reduction in structural unemployment.
The surge in inflation has prompted central banks to normalise their monetary policy. This means they are tightening financing conditions by raising key interest rates.
During the COVID crisis, the Eurosystem has purchased securities on the markets and granted banks loans on favourable terms. These measures have helped avoid a deep recession and deflation in the euro area.