Now the European Commission has also finally let the cat out of the bag. After the past forecasts on economic growth and employment were in some cases clearly off the mark and too optimistic, the Commission is now finally putting the facts on the table. And they look anything but rosy.
The most recent interim forecast for 2009-2010 shows a clear downturn in the entire EU area. The financial crisis has ultimately hit the real economy. The economic slump will lead to a dramatic fall in employment and an increase in unemployment and therefore a rise in public spending in most European countries.

According to the interim forecast of the Commission published on 19 January in Brussels the growth in GDP of the EU-27 will fall by 1.8 % in 2009. According to experts, this decline in economic growth will lead to the loss of 3.5 million jobs and the unemployment rate in the EU will rise to 8.75 % in 2009. The ripples of the financial crisis felt throughout Europe will also affect Austria. For Austria the Commission is expecting a decline in GDP growth of 1.2 % in 2009. In the Austrian labour market this means a drop in employment of 0.8 % in this year. Although the Commission currently expects minimal growth of 0.5 % for 2010, it has to admit that this estimate may contain considerable uncertainties. It might therefore also be much worse.

The automotive industry including suppliers has been particularly affected by the financial and economic crisis. In 2008 in the EU there were already 8 % fewer cars sold and in 2009 a further drop in sales of 10 – 20 % is expected. The problems of the automotive industry are particularly dramatic because this branch is one of the most important in the European and also in the Austrian economy. In the whole of Europe 12 million people are employed in the automotive sector.

For this reason Commissioner for Industry Günther Verheugen called an informal meeting of the economics ministers on this issue in Brussels on 16 January. First of all in the meeting was a joint analysis of the problems in the automotive sector. Here three central factors emerged which are responsible for the problems. First the short-term fall in demand. Second a general structure problem within the automotive industry: the automotive sector has structural overproduction of 20 %. And third a shortage in available capital on account of the banks being reluctant to grant credit. This makes it difficult for small and medium-sized businesses from the supply industry in particular to make it through the crisis.

After this the role of the EU in fighting the crisis in the automotive sector was discussed. There was agreement that the EU has an important coordinating function and ensures that the principles of fair competition and the domestic market are adhered to. With regard to recommendations or guidelines on the different national “rescue packages” for the automotive sectors of the member states the results have remained (deliberately) vague, however. It is noted only that at the national level measures both on the supply side and on the demand side are necessary. Here the thought is of scrapping premiums, tax incentives, plans for safeguarding jobs and better access to credit for car makers. On the last point the European Investment Bank indicates that now nearly all car makers in Europe are already cooperating with it. The envisaged project volume is € 6 billion, which is going to be invested in “green” projects in particular.

For the question of where the workers stand in the financial and economic crisis, the current economic forecasts give a clear answer: the workers are bearing the brunt of the crisis – with loss of jobs, short-time work and a fall in purchasing power. The workers’ representatives will continue to insist that clear regulations have to apply for the finance industry. It has to be prevented at all costs that profits become privatised in good times and the public authorities and the workers have to take responsibility for the losses and debts of irresponsible market participants and managers in bad times.

For further information:

EU interim forecast 2009-2010

Summary of the EU interim forecast 2009-2010

The European response to the current crisis of the automotive sector