Ailing economies warned to pull up their socks
A European Commission report has offered a mix of scolding, praise and promises of cash to seven ailing European Union economies.
Spain: The commission gave the country an extra year to carry out one of the harshest deficit cuts in Europe and offered to rescue its ailing banks. Encouraging words about the restructuring of its financial sector came with a warning that it would face further pressure as the recession drags on and joblessness looked set to rise from 24%.
“Spain appears now to be at medium risk with regard to the sustainability of public finances in the long term.”
France: The commission praised cuts in state spending, but warned that France would take a long time to hit the European Union’s 3% annual deficit target. To generate jobs and growth it had to end restrictive labour practices. Growth next year would be just 1.3%.
Greece: After last year’s near 7% contraction in gross domestic product, the Greeks were not expected to to have a better time in 2012. The silver lining, said Brussels, was the way government spending and business subsidies had been cut over the past two years. Now Athens has to press ahead with structural reforms.
Ireland: Brussels put a positive gloss on every dire figure coming out of Ireland’s economy. Officials said it had made “important progress” despite being in recession.
Italy: The commission said unemployment was set to rise and the recession would last at least until the end of 2012. It praised the government for a spending clampdown that had restricted the country’s debt to 120% of gross domestic product.
Portugal: The economy was predicted to contract by 3.3% this year and unemployment to rise from 15%. The commission said Lisbon was failing to tackle labour market restrictions but praised plans to limit youth unemployment, now at 34%.
United Kingdom: Economic activity would stay “subdued with growth of 0.5% this year before regaining momentum in 2013”. The commission praised spending cuts, but raised concerns about the risk that they would conflict with the need to rebuild infrastructure. – © Guardian News & Media 2012