European Commission presented its Autumn forecast 2011-13 in which it clearly stated that EU growth is at a standstill. In addition, GDP in the EU is now projected to stagnate until well into 2012. In fact, the figures shows that annual GDP growth in 2012 is forecast at 0.6% in the EU and 0.5% in the euro area. Growth in 2013 is expected to remain lacklustre at 1.5% in the EU and 1.3% in the euro area.

The European Commission published its forecast for 2011-13 in which it clearly stated that the economic recovery has come to a standstill. This forecast is even worse than the one announced in September by the Commission, in which the forecast were that the economic growth in the EU was slowing down but there was no risk of a double dip. According to the Commission forecast, a stagnation of GDP is now expected in the current and coming quarters. The weakening real economy, fragile public finances and the vulnerable financial sector appear to be mutually affecting each other in a vicious circle. Confidence and growth will only return once this negative interaction is interrupted. Even so, the policy measures decided over the past months, such as the economic governance package of laws, are expected to be effective in reducing the uncertainty related to the sovereign-debt and financial-market crisis towards mid-2012, and this will gradually release deferred investment and consumption.

Furthermore, the risk of a recession is not negligible in view of the frail GDP growth expected. The main downside risks stem from sovereign debt worries, the financial industry and world trade. On the upside, confidence might return faster than currently assumed, releasing the potential for an earlier-than-expected recovery of investment and private consumption. Global growth could prove more resilient than projected in the baseline scenario and provide support to EU net exports. Finally, a larger decline in commodity prices could enhance real incomes and consumption.

With regard to the employment, its growth is expected to grind to a halt in 2012. The expected pick-up of GDP growth starting in the second half of next year is too moderate to produce any strong labour market performance. Unemployment is not expected to fall over the forecast horizon. The situation of Member States' labour markets continues to differ substantially.