Euro area shedding jobs as growth falters
RICHARD CARTER
29.10.2003 @ 15:50 CET
EUOBSERVER / BRUSSELS - The euro area will lose 200,000 jobs this year - the first decline in employment since 1994.
This was one of several gloomy economic predictions presented by Economics and Monetary Affairs Commissioner Pedro Solbes today in the Commission's autumn economic forecasts.
The future for employment in the EU looks anything but rosy, as well. According to the report, "given the sluggish recovery and persisting rigidities, very little job creation is foreseen for next year".
Growth is to blame
One reason for the poor outlook is that the euro area is still struggling to create economic growth. Growth is expected to be a mere 0.4 percent in 2003 in the euro area. Moreover, there is a wide variation in the growth rates of individual countries - ranging from 4.1 percent in Greece to -0.9 percent in the Netherlands.
The Commission blamed global uncertainties due to the war in Iraq and poor consumer and business confidence for the low level of growth.
Deficit problem won't go away
Mr Solbes was also downbeat on the prospects for Member States' budget deficits. The budgetary problems of France and Germany have been a source of tension in the EU for two years, but they are expected to be joined in the Commission's bad books by Italy, the Netherlands and Portugal.
Referring to the budgetary situation, Mr Solbes said, "I sincerely hope that every country does better".
Accession countries: resisting the slowdown
The gloom hanging over the present EU Member States was lifted somewhat by strong growth predicted to come from future EU members.
Average growth in the 10 countries set to join the EU is expected to be 3.1 percent in 2003 - over seven times higher than the average in the euro zone. There is an even wider variation in growth prospects between accession countries - ranging from 6.6 percent in Lithuania to 0.8 percent in Malta.
But unemployment remains a pressing problem in the new member states. The situation is expected to improve, but there will still be an average unemployment rate of around 15 percent in 2005.
Positive signs
But some positive signs emerged from today's presentation. Mr Solbes told journalists, "there are encouraging signs that the worst is behind us".
"All in all, I would like to conclude on a positive note. The European economy has avoided a recession in the current rather long period of slow growth and there is optimism about growth prospects for the next two years", concluded the Commissioner.
