Employers and unions fear for EU real economy
LEIGH PHILLIPS
15.10.2008 @ 09:23 CET
European employers and workers are both fearful that even if EU and world leaders manage to save financial markets from calamity, the real economy beneath the froth and waves of finance is set to be hit hard.
Business Europe, the federation bringing together some of the continent's largest corporations, on Tuesday (14 October) said it expected to slash its growth forecast for 2009 from its current prediction of 1.7 percent for the eurozone in 2009.
The real economy now needs to be helped out, employers and unions say (Photo: Notat)
"We are going to revise significantly downwards our economic growth forecasts for next year," said Mark Stocker, economics director of the employers' group, speaking to reporters, although he did not name any new figures.
"We are certainly in a serious situation," he added.
"Although we don't see a full-blown credit crunch in Europe, we can nevertheless see that there will be harder economic times ahead."
Also speaking yesterday, John Monks, the head of the European Trade Union Congress, called on the European Central bank to "cut rates to boost the economy and to build on the little degree of fragile confidence that we can now detect."
Mr Stocker, of Business Europe, also said the ECB should look at "all the available options".
Last week, the central bank cut interest rates from 4.25 percent to 3.75. Just days before, the bank had announced it was to maintain rates as they stood, as inflation was still a significant worry.
The crisis, which is making it much harder for families and small businesses to access credit, comes at a time when food bills and filling up the tank are already giving households a shock to their wallets.
With the real economy - manufacturing, services and other sectors that produce actual 'things' - in many countries under performing for decades, money has ploughed into the deregulated financial sector. Now that that bubble has burst, the weakness of the real economy is more apparent than ever.
While the two traditional workplace antagonists agreed on the need for the ECB to focus more on priming the pump than battling inflation, they disagreed on their prescriptions for how to re-regulate the financial sector.
Business Europe, warned against new rules for banks that were unduly onerous, while the trade unions for their part said it was time for those that got the economy into the current situation to be put on a tight governmental leash.
"We do want public influence to go with public money," said Mr Monks. "This is not a free ride bailout for the institutions, this is something they've got to earn."