Highlights
- Demand growth in Europe is weak as spring approaches
- Output from Europe's leading suppliers is under pressure
- Storage levels in leading markets are high going into the end of winter
- Bearish fundamentals are keeping European hub prices low
Economic overview
Economic growth in the UK will be flat - while Spain looks set for increased economic expansion.
UK GDP expanded by 2.2% in 2015 and growth is expected to be flat this year and next, according to the latest outlook from the International Monetary Fund. Uncertainties regarding negotiations with Europe and the timing of a referendum on a ‘Brexit’ from the EU are weighing on investment and confidence in the UK’s economy. The referendum could be held as soon as June, but the government has not formally decided on a date. Despite the outlook for flat economic growth, the UK’s gas demand is expected to increase this year as low prices have made gas competitive in the power sector.
GDP forecast
| 2014 | 2015 | 2016 | 2017 | |
| Germany | 1.6% | 1.5% | 1.7% | 1.7% |
| France | 0.2% | 1.1% | 1.3% | 1.5% |
| Italy | -0.4% | 0.8% | 1.3% | 1.2% |
| Spain | 1.4% | 3.2% | 2.7% | 2.3% |
| UK | 2.9% | 2.2% | 2.2% | 2.2% |
Spain’s GDP is expected to grow by 2.7% in 2016 and by 2.3% in 2017 – higher than any other eurozone country. This is less than the 3.2% seen last year, but is still the strongest growth forecast for any major European economy.
Falling unemployment will help boost Spain’s economic growth. Although 20.9% of the country’s workers were jobless last year – one of the highest rates in Europe – it is Spain’s lowest level of unemployment in nearly five years. However, political uncertainty could threaten Spain’s recovery. The inconclusive outcome of December’s general election and the resulting difficulties in forming a coalition government may make it challenging for the new administration to push through further economic reforms.