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In February 2010 compared with January 2010, the industrial producer price index rose by 0.1% in both the euro area (EA16) and the EU27. In January, prices increased by 0.7% and 0.8% respectively.

The main challenge for the next Czech government taking over after the May elections will be to repair the deterioration in public finances caused by the economic crisis, says a new OECD report. To promote medium-term growth, more should be done to improve the regulatory environment for business, lower the administrative burden and make the tax system less distortive.

The EU’s newest member countries – Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia – are set to return to growth in 2010 and 2011, but the rate of growth is likely to be lower than the pre-crisis rate. According to the World Bank’s new EU10 Regular Economic Report, after contracting by 3.6 percent in 2009, the latest government projections have the EU10 countries set to expand by a modest 1.6 percent in 2010, and 3.6 percent in 2011.

This special issue of the Quarterly Report on the Euro Area provides a comprehensive assessment of the impact of the crisis on external divergences in the euro area. After a decade of steady divergence, the global economic crisis has triggered a partial rebalancing of current accounts in the euro area. The narrowing of current account differences between Member States has both structural and cyclical causes and could be partially reversed with the recovery. It has so far been associated with only modest correction of past divergence in price competitiveness. As a result, significant adjustment needs continue to exist and call for a comprehensive policy response tailored to the specific needs of each Member State. The crisis has underscored the need for reforms in the euro area and for co-ordination across Member States. A coordinated and ambitious policy response would ease the necessary adjustment processes but would also boost the euro-area's long-term growth prospects. Tackling these challenges is a central plank of the new Europe 2020 strategy for smart, sustainable and inclusive growth.

The euro area (EA16) seasonally-adjusted unemployment rate was 10.0% in February 2010, compared with 9.9% in January. It was 8.8% in February 2009. The EU27 unemployment rate was 9.6% in February 2010, compared with 9.5% in January. It was 8.3% in February 2009. For the euro area this is the highest rate since August 1998 and for the EU27 since the start of the series in January 2000.

South East Europe (SEE) needs to attract more and better inward investment to pull out of the economic downturn and build the basis for long-term sustainable growth. Achieving this will require further major policy reforms, according to a new OECD analysis.

The EU is the world's largest economy, with enough international clout to return to "real capitalism" rather than resign itself to an alien "financial capitalism", concluded MEPs and experts at a public hearing held on Thursday by Parliament's special committee on the crisis.

The Conference Board Leading Economic Index® (LEI) for the Euro Area increased 0.7 percent and The Conference Board Coincident Economic Index® (CEI) remained unchanged in February.

In March, the Economic Sentiment Indicator (ESI) improved significantly, reaching 99.6 (+2.0 points) in the EU and 97.7 (+1.8) in the euro area. After the pause recorded in February, the upward trend appears to have regained its momentum. The ESI is now close to its long-term average, albeit it will still require further improvement for the economic activity to reach its pre-crisis level.

Innovation, education and more competition in the domestic market would help Germany emerge from the economic crisis with a stronger and more balanced economy. Labor market policy should now pave the way for necessary structural changes while fiscal policy needs a specific exit strategy with focus on consolidating public finances over the coming years. These are the key policy recommendations from the OECD’s latest Economic Survey of Germany.