No cause for celebration as Commission releases economic forecasts

6 May 2014

On Friday 3rd May, the European Commission published its Spring Economic Forecast for 2013. There is certainly no cause for celebration, with the forecast outlining a slowly recovering EU economy but one which is surrounded by a great deal of uncertainty for the coming months.

No cause for celebration as Commission releases economic forecasts

Most worryingly are the employment rates which are set to reduce by a further 0.5% in the EU as a whole and by 0.75% in the Euro area.

It is important to note that economic stabilisation is taking place only if an average perspective is taken. Wide discrepancies are still present across Europe, with the situation being considerably worse in Southern European countries. In Spain and Greece, the unemployment rate will reach 27.0%, while in Portugal this rate will reach 18.3%. This means unemployment will have increased by around 3% in these countries from 2012 to 2013. These figures are released in a context of relentless austerity and public sector cuts.

The forecast was published alongside the Commission’s loosening of the austerity belt, however only in certain countries. France, whose economy the Commission expects to contract slightly, and Spain were offered two year’s more in order to come in line with deficit targets.

For Portugal, which is introducing proposals for public spending cuts, there seems to be no easing of austerity on the horizon. The new package will see cuts to 30,000 public sector jobs, an increase in the age of retirement by one year to 66 and the prolonging of the working week by five hours.

Recently having published an article in EurActiv (The long and painful path of austerity), CESI Secretary General Klaus Heeger continues to be seriously concerned with the economic situation in Portugal: “The link between austerity and unemployment is clear from the Spring Economic Forecast published by the Commission. More austerity equals higher unemployment. Investing in the public sector is needed in order to see a return to growth, not cutting public sector jobs. CESI will work hard over the next few months to promote the importance of the role of the public sector in ensuring economic growth”.