On Friday, 22 February, the EU Commission presented its European Economic Winter Forecast 2013. The eurozone will remain mired in recession in 2013 and unemployment will rise to 12.2 %. For Austria, the Commission expects unchanged levels of unemployment (4.5 %) and a slight increase in GDP (0.7 %). Whilst the Commission interprets a phase of upturn in economic growth and employment from 2014 as a light at the end of the tunnel, one can currently observe the results of a failed European economic policy: the very focus of fiscal policy on reducing debt and cutting expenditure prevents the fight against mass unemployment and the consolidation of public budgets.
According to the winter forecast of the EU Commission, the European economy will also experience a year of crisis in 2013. The gross domestic product in the eurozone will shrink by 0.3 % and in the EU27 remain at the level of 2012. This also has an effect on employment, whereby the Commission forecasts a further decline for the eurozone, because of which the rate of unemployment in the eurozone increases to a new record high of 12.2 % (EU27 11.1 %). With the exception of the Baltic states, the rate of unemployment in 2013, compared to the previous year, will continue to rise in all Member States or remain approximately the same, whereby the latter applies to Austria (4.5 % according to the European method of calculation). The situation in the labour market also remains disastrous for Portugal (17.3 %), Spain (26.9 %) and Greece (27 %). Assuming that the countries will not change their individual policies, the Commission forecasts no labour market recovery for 2014 either. However, due to improved conditions in the financial market and an increasing foreign demand, the Commission expects a gradual recovery of the economic situation for 2014, which shall be reflected in an economic growth of 1.4 % (eurozone) resp. 1.6 % (EU27). As according to the Commission, the effects of higher energy prices on inflation decline, inflation in the eurozone is expected to fall to 1.8 % (2013) resp. 1.5 % (2014). Compared to 2012 (3.5 %), the budget deficits in the eurozone are expected to fall slightly and stand at ca. 2.7 % in 2013 resp. 2014.

Commission: austerity measures gradually making an impact

Even though there is no improvement in sight in the labour market and the slightly improved figures for 2014 are also still very vague, the Commission interprets this data as economic progress resp. as a vindication of its economic and monetary policy course. According to comments made in the press conference by Olli Rehn, Commissioner for Economic and Monetary Affairs and the Euro, the reform course (budget consolidations via public spending cuts and “structural reforms”) propagated by the Commission, will also have an impact on the labour market in the long run. In particular strictly adhering to the policies propagated by the Commission by way of comprehensive consolidation measures from 2014 would improve economic problem fields such as domestic demand, low willingness to invest, difficulties in borrowing for SMEs and falling employment. Most important – so the austerity policy logic – would above all be the reduction of budget deficits resp. of government debt.

Employment and investment offensive in a sustainable social infrastructure

The results of this failed policy have been evident since the financial and economic crisis in Europe: benefit and income cuts undermine every prospect of economic recovery, economic growth and employment. Europe has been suffering from record unemployment for years. The economic policy, carried out by the current Commission, ignores the interests of European employees and consumers. The single focus on austerity, competition and stable investment conditions does not offer a way out of the recession either. The current non-growth can only be overcome by a change in European economic policy - one, which increases employment, promotes investments and sustainably strengthens the public, social infrastructure. Only then will it be possible to tackle the budget deficits. The coming Spring Economic Forecast of the European Commission will be published at the beginning of May.