EU economy has entered 2024 on a weaker footing than expected

Erste Bank Research Team Erste Bank

Politics

MEPs have backed plans to create an EU digital wallet. The new digital identity framework will provide EU citizens with cross border digital access to key public services. The new Digital Identity Wallet will allow citizens to identify and authenticate themselves online without having to resort to commercial providers - a practice that raises trust, security and privacy concerns.

The head of the European Commission, Ursula von der Leyen, announced that the Commission will develop a strategy on how the EU should invest in defence and strengthen the arms industry.

Following protests by farmers, the European Commission has proposed to restrict some imports from Ukraine and simplify bureaucracy. The Commission also proposed more flexibility on the rules on unused land and the extension of the suspension of import duties on Ukrainian exports until June 2025. The Commission's proposals will be examined by the EP and the Council of the EU.

The Commission has set out several actions to help ensure that the EU meets its 2030 digital infrastructure targets. Fast, secure, and widespread connectivity is crucial. This concerns innovations like telemedicine, automated driving, artificial intelligence, and smart buildings.

The European Parliament has given its final green light to the reform of EU rules strengthening the protection of Geographical Indications for wine, spirit drinks and agricultural products. The regulation protects GIs offline and online, gives more powers to their producers and simplifies the registration process for GIs.

Economy

In the fourth quarter of 2023, seasonally adjusted GDP remained stable in both the euro area and the EU, compared with the previous quarter. In the third quarter of 2023, GDP had remained stable in the EU. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 0.2% in the EU in the fourth quarter of 2023.

EU annual inflation was 3.1% in January 2024, down from 3.4% in December. A year earlier, the rate was 10.0%. The lowest annual rates were registered in Denmark and Italy (both 0.9%). The highest annual rates were recorded in Romania (7.3%), Estonia (5.0%) and Croatia (4.8%). Compared with December, annual inflation fell in fifteen Member States, remained stable in one and rose in eleven.

The EU unemployment rate was 6.0% in January 2024, stable compared with December 2023 and down from 6.1% in January 2023.

The annual average industrial production for the year 2023, compared with 2022, decreased by 2.0% in the EU. Among Member States for which data are available, the highest monthly increases were registered in Ireland (+23.5%) and the Netherlands (+6.6%). The largest decreases were observed in Slovenia (-7.4%), and Croatia (-4.3%).

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Erste Bank Research Team

Erste Bank

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