EU Commission calls for social reforms


Economics of the EU can not cope with the sharp increase of government expenses directed at combating the crisis and maintaining the growing number of unemployed, said the latest report of the European Commission. The Commission calls on EU countries to sharply tighten financial discipline so that the economic growth does not stall when the economic recession comes to the end.

In 2009-2010 the total anticrisis package of the EU countries made 600 billion euro (5 per cent of EU GDP). However, according to the recent European Commission report, this amount may become very small compared to the one when the European banking sector enters, which, according to authors of the study will range from 2.75 per cent to 16.5 per cent of the GDP of the EU. The outcome depends on many factors, but the study of 49 financial crises that have occurred in the world since 1970, says that on average the figure will be about 13 per cent of GDP of the EU.


In addition, the heavy burden of keeping a growing number of unemployed people has also fallen on the state budget : according to studies unemployment in the EU will reach 11 per cent in 2010. Its contribution has also made the demographic situation: Europe is becoming «old», and the burden of pensions has also been put on the shoulders of the treasury. As a result, the average debt of the EU could rise to 80 per cent of GDP next year, compared with 60 per cent in 2007. «The latest statistics says that the EU economy is still very fragile and vulnerable», – said economist of the National Bank of Australia David Tinsli. In June PMI business activity index rose much less than were the expectations of experts – by 0,4 per cent to 44,4 per cent. And while it remains no more than 50 per cent, it indicates a continuing decline.

EU Commission calls for social reforms
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