Verging into a short circuit?

There appears to be a short circuit between Europe and Greece. The “Economic forecasts” submitted in Brussels indicate a modest recovery after a long period of recession, while the European Parliament debated the “EU 2020 Strategy” for development and employment. On the same day, May 5, a popular revolt broke out in Athens against the austerity plan imposed by government and Union which ended in a tragedy: three dead and a bank set to fire. Gradual recovery but no jobs. EU27 proceeds at different speeds. Some States see the horizon at the end of the tunnel of the crisis, while others, like Greece, and perhaps also Portugal, Spain and Ireland, are experiencing their darkest moments. The “Spring Economic Forecasts” drawn up by the Barroso Commission state: “After having experienced the deepest recession in its history, the EU economy is set to grow by 1% in 2010 and 1¾% in 2011”. Although the economic recovery is “in progress”, the impacts of the recession will have to be closely monitored in the entire course of 2010 and over the forthcoming years. The document predicts the continuation of the standstill in the labour market: “Reflecting the usual lag between developments in the real economy and the labour market, employment is still expected to contract by some 1% this year and begin to increase only in the course of 2011”. Public balances under observation. The Commission reconfirms a positive evaluation of recovery measures taken by some Member States during the year, despite the impact on national budgets: “The recession has had a major impact on public finances. As a result of the operation of automatic stabilisers and the discretionary measures taken to support the economy within the framework of the European Economic Recovery Plan, the government deficit has tripled since 2008”. The Commission blueprint states that the EU “is projected to peak this year (reaching 7¼% of GDP) and to improve slightly in 2011 (to around 6½%). This follows from the expiry of temporary support measures and the pick-up in activity”. Commenting on the temporary figures, EU Commissioner for Economic and Monetary Affairs, Olli Rehn, said: “The improved outlook for economic growth this year is good news for Europe. We must now ensure that growth will not be derailed by risks related to financial stability”. The Executive also delved into the future prospects of financial markets and the possible impacts on consumption and private investments. Contradictions? The document equally affirms: “The recent upsurge in confidence (especially in manufacturing) points to some upside risks in the near term.” Furthermore, “A successful completion of the financial support to Greece can be expected to increase investor and consumer confidence”. Indeed, contradicting figures in the Commission’s report cannot be overlooked. In a note, Commissioner Rehn states: “The economic recession came to an end in the EU in the third quarter of 2009”; “the recovery is proving more gradual than in past upturns”; “Like other developed countries, the EU will grapple with the legacy of the crisis for some time to come”. Survey data show that differences across countries have widened. While the EU’s GDP is expected to grow by 1.0%, figures relating to Member State economies vary: Germany 1.2%, France 1.3%, United Kingdom 1.2%, Italy 0.8%, Poland 2.7% (the best performance with Slovakia). GDP is forecast to contract by ¼% in Spain while negative trends are predicted for Greece (-3.0%), Latvia (-3.5%), Ireland (-0.9%), Cyprus (-0.4), and Lithuania (-0.6). “A very difficult phase”. However, seen from the standpoint of Greece, the situation is different: “My Country is experiencing a very difficult moment and the deaths” of May 5 “confirm it”: Greek MEP Anni Podimata commented on the “tragic events” under way in Athens and in other Greek cities. The MEP is an expert in economic themes: she is the vice-Chair of the Committee on Industry, Research and Energy, and has been appointed member of the Economic and Monetary Affairs Committee and of the ‘ad-hoc’ crisis monitoring Committee of the EP. From her post she is attentively following the developments of the situation and intends to voice the claims of her fellow-citizens. “A European strategy is needed to overcome this period – she said -. Europe 2020 could represent a solution, provided that concrete and urgent measures are adopted”.