The EU Commissioner for Economic and Monetary Affairs and the Euro, Olli Rehn, recently presented the new European Economic Forecast for 2013 and 2014. Whilst the Commission itself - similar to economic forecasts of recent years - believes it has seen the light at the end of the tunnel, current figures provide little hope for the European economy and the 26 million people who are unemployed: the Commission projects that in 2013 the economy will shrink more than originally expected. In 2013, the GDP in Europe is anticipated to fall for the third year in a row; slight growth is only expected for 2014. The rate of unemployment, which in 2014 and in 2013 will stand at almost 12 %, is particularly devastating. These figures show once again the social and economic failure of the current radical stance of economic policy at European level. What is required more than ever is a political departure of this dogmatic and short-sighted austerity doctrine and to replace it with massive investments in qualitative growth and sustainable employment.

According to the EU Commission, in 2013, the euro area will slide even deeper into recession than anticipated. In the eurozone, the Gross Domestic Product (GDP) would shrink by 0.4 % and in the whole of Europe by 0.1 %. In the second half of 2013, GDP growth is expected to reach positive figures again, achieving a slight plus in 2014: in 2014, GDP in the eurozone is expected to grow by 1.2 %, in the whole of Europe by 1.4 % and in Austria by 1.8 % - always on the assumption that the policies in the individual countries will remain unchanged. According to the present forecast, in 2013, at 2.9 percent, this year new debt in the euro area will be under the three percent threshold of the stability pact. A deficit of 3.4 % has been forecast for the entire EU, whereby both key figures for 2014 will probably not change. In respect of Austria, this forecast anticipates a deficit of 2.2 % in 2013 and of 1.8 % in 2014. Thus, the debt ratio - the ratio of government debt to GDP - in the European States will remain high. Inflation too is expected to remain at a low level in 2013 and 2014. Another reason why all these figures gain in importance in the European debate is the fact that the current economic forecast forms the quantitative basis for those country-specific recommendations of the Commission, which will be addressed at the end of May within the scope of the “European Semester”.

Disastrous situation on the EU labour market

In contrast, the situation on European Labour markets remains disastrous. It is expected that in 2013, employment in Europe will fall by another 0.4 % (euro area minus 0.7 %). At an increase of 0.7 %, Austria's position would be slightly better. Provided current policies were maintained, employment in the whole of Europa would rise by 0.4 % in 2014. Similar to the GDP, these figures have to be taken with a pinch of salt as the economic forecast of the Commission has been proven to be too optimistic in recent years. The rate of unemployment itself will also in 2014 remain at an unprecedented high level: as in 2013, the Commission forecasts a rate of 11.1 % for the European Member States. In the eurozone, 12.1 % resp. 12.2 % of people of working age will be without a job in both years. The rate of unemployment will be far over ten percent in several countries - according to the Commission, it will climb to 27 percent in Spain and Greece this year and remain there in 2014. Even though Austria, compared to other European countries has the lowest rate of unemployment, the Austrian labour market is not expected to recover in 2014 either: in accordance with the European method of calculation, the projected unemployment rate for Austria will be 4.7 % - both this and next year.

"We must do whatever it takes to overcome the unemployment crisis in Europe", declared Rehn at a press conference on the 2013 Spring Economic Forecast. However, the Commission’s own figures are now confirming that the current economic and fiscal policy of the Commission has been misguided - unfortunately, this does not seem to get through to the majority of the Commission itself. Admittedly, there have been some minor symbolic concessions to critics of the austerity policy and it has been decided that France and Spain would be granted two more years to achieve their targets concerning reducing their deficits. However, this has little effect on the fundamental employment hostile orientation of the Commission’s economic policy: the main focus lies on reducing debt by spending cuts to calm “the financial markets”. However, this ideological approach fails to recognise that long-term debt reduction can only be successful if governments invest in growth and employment. Hence, what is needed more than ever are Europe-wide coordinated investments in economic areas of the future and the development of a sustainable and social infrastructure, which gets Europe back on the path of employment and growth. Tackling unemployment, in particular youth unemployment, has to be the top priority.

The detailed European Economic Forecast:

http://ec.europa.eu/economy_finance/publications/european_economy/2013/pdf/ee2_en.pdf