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EU says Euro zone economy to shrink again in 2013

Colin Stevens

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The euro zone will not return to growth until 2014, the European Commission said on Friday, reversing its prediction for an end to recession this year and blaming a lack of bank lending and record joblessness for delaying the recovery.

The 17-nation bloc's economy, which generates nearly a fifth of global output, will shrink 0.3 percent in 2013, the Commission said, meaning the euro zone will remain in its second recession since 2009 for a year longer than originally foreseen.

The Commission, the EU executive, late last year forecast 0.1 percent growth in the euro zone's economy for 2012, but now says tight lending conditions for companies and households, job cuts and frozen investment have delayed an expected recovery.

The Commission sees the euro zone economy growing 1.4 percent in 2014, with a figure of -0.6 percent for 2012.

"The improved financial market situation contrasts with the absence of credit growth and the weakness of the near-term outlook for economic activity," said Marco Buti, the commission's director-general for economic and monetary affairs. "The labor market... is a serious concern," he said, in a preamble to the Commission's latest forecasts.

The European Central Bank promise last year to do what it takes to defend its common currency has removed the risk of a break-up of the euro zone, and member countries' borrowing costs have come down from unsustainable levels.

But the damage from the 2008/2009 global financial crisis and the ensuing euro zone debt crisis has been greater than expected on the real economy, with global demand for euro zone exports one of the few saviors in terms of generating growth.

Joblessness in the euro zone is set to peak at 12.2 percent, or more than 19 million people, in 2013, the Commission said, and both private and public consumption will not make any contribution to improving output, instead dragging on the economy.

The outlook raises the prospect of further interest rate cuts by the ECB to jump-start the economy by reducing the cost of lending for companies and families, although with banks reluctant to lend, any impact may be muted.

 

 

Colin Stevens

EU

Cities call for new EU pact for just and sustainable recovery

EU Reporter Correspondent

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Social inequalities are deepening. Homelessness and unemployment rates are shooting upwards, and new groups of people have emerged as at risk of poverty and social exclusion. City leaders from around 70 cities, meeting today, one day ahead of the EU Social Summit, have called for a new pact between all levels of government to reverse these dangerous trends and foster a just, sustainable and inclusive recovery.

“As city leaders, we have stepped up our responsibilities to implement social policy and guarantee public social investment over the past 12 months,” said Dario Nardella, president of Eurocities and Mayor of Florence. “But the recovery we now face will take bold actions and imagination to build back better and fairer. Despite repeated calls, many cities are still not consulted in the national recovery plans. That’s a lost opportunity that the EU cannot afford at this time, which will dampen Europe’s ability to bounce back. Without cities, the prospects for a sustainable and inclusive recovery look grim.”

In their conclusions, the city leaders say that the EU social targets for 2030 should be matched by ambitious reforms and investments. Specifically:

  • An annual social summit on the European Pillar of Social Rights action plan, with a meaningful participation from cities.
  • A strong social dimension in the European Green Deal.
  • Strengthen social investment and investment in social infrastructure, including social and affordable housing, as the way to deliver a just recovery, leaving no one behind.

“A new pact must commit the different levels of government to design a recovery response that works for people and planet. When so many people have been so badly affected this year, especially in our cities, now is the time to lend a helping hand, not to turn our backs,” added Nardella.

Cities have already demonstrated their commitment to implementing the European pillar of Social Rights through the 66 city pledges to the Eurocities ‘Inclusive Cities 4 All’ initiative, which have so far mobilised a total of €15bn in municipal investments for social causes.

“We are ready to do even more and work shoulder-to-shoulder with the EU and member states,” concluded Nardella. “In turn, we expect European leaders to engage us as key partners in the EU agenda for recovery.”

“We must use the recovery to prioritise the needs of people through our investments in green and digital reforms!  At the local level we see that social and environmental policies are interrelated,” said Maarten van Ooijen, Chair of Eurocities Social Affairs Forum and Deputy Mayor of Utrecht. “Cities can ensure that people are skilled to match green job opportunities, and we can develop local pacts by bringing together local businesses and training providers. We also need to avoid further deepening of the housing crisis in our cities. With urgent support from the national and EU institutions we can ensure a just recovery through targeted long term social investments in affordable housing” he concluded.

Dario Nardella, President of Eurocities and Mayor of Florence, will deliver the conclusions from the Cities Social Summit directly to European leaders at the EU Social Summit on Friday 7 May 2021.

  1. The following city leaders took part directly in the Eurocities Cities Social Summit, held on 6 May: Dario Nardella, President of Eurocities and Mayor of Florence; Ada Colau, Mayor of Barcelona; Ricardo Rio, Mayor of Braga; Susan Aitken, Leader of Glasgow City Council; Katrin Habenschaden, Mayor of Munich; Anne Hidalgo, Mayor of Paris; Rui Moreira, Mayor of Porto; Ahmed Aboutaleb, Mayor of Rotterdam; Maarten van Ooijen, Chair of Social Affairs Forum and Deputy Mayor of Utrecht; Sonia Fuertes, Commissioner for Social Action, Barcelona; Matteo Lepore, Deputy Mayor of Bologna; Elke Decruynaere, Vice-mayor of Ghent, responsible for education and youth; David McDonald, Deputy Leader of Glasgow; Thomas Fabian, Deputy Mayor of Leipzig; Renaud Payre, Vice President on habitat, social housing and urban policy of Lyon Metropole; André Sobczak, Deputy Mayor of Nantes; Alexandra Sußmann, Vice Mayor, Stuttgart; Betina Beśkina, Deputy Mayor of Tallinn; Marina Hanke, Vice-chair of Committee on European affairs, Vienna; Nina Abrahamzik, Councillor and Chair of the Committee on climate, environmental policy, public services and democracy of Vienna.
  2. The full conclusions from the Eurocities Cities Social Summit can be accessed here  
  3. Eurocities is running a campaign ‘Inclusive Cities 4 All’ engaging mayors and deputy mayors to commit to improve access to social rights, including childcare services and support for children. So far, 66 city commitments have been signed, representing 51 million citizens and totalling a municipal investment of €15bn. All city pledges are available here.
  4. Eurocities wants to make cities places where everyone can enjoy a good quality of life, is able to move around safely, access quality and inclusive public services and benefit from a healthy environment. We do this by networking almost 200 larger European cities, which together represent some 130 million people across 39 countries, and by gathering evidence of how policy making impacts on people to inspire other cities and EU decision makers.

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EU

European Globalization Adjustment Fund: helping redundant workers

EU Reporter Correspondent

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Parliament has updated the European Globalisation Adjustment Fund, making it more accessible and better equipped to tackle global crises.

The European Globalization Adjustment Fund is one of the ways the EU is helping to tackle unemployment. Globalization can cause significant structural changes to world trade, which can lead to workers being laid off.

To support people losing their jobs due to globalisation or the economic fallout from major crises, such as the Covid-19 pandemic, the EU created the European Globalization Adjustment Fund in 2006. It is an emergency solidarity fund, which is used whenever there is a need for it. The fund co-finances projects to help workers find new jobs or set up their own business.

Find out what the EU does to manage globalization MEPs secured these changes to the European Globalisation Adjustment Fund: 

  • Threshold for applications for support lowered to 200 dismissed workers (down from 500) 
  • Possibility to apply for a one-time investment of €22,000 to start a business or to finance employee take-overs 
  • Childcare allowance for child carers when taking part in training or looking for a job 
Background

On 16 January 2019, MEPs voted in favour of plans to reform the fund for the post-2020 period. The aim was to broaden the fund's scope to offer assistance in case of major restructuring events linked to digitalisation, automation and the transition to a low-carbon economy. After successfully negotiating the changes to the fund with the Council in December 2020, MEPs adopted the regulation in April 2021.

The fund will be crucial in helping dismissed workers during these difficult times. It is now better equipped to help us face the challenges ahead and it will cover any type of redundancies following restructuring

Vilija Blinkevičiūtė (S&D, Lithuania)

MEP in charge of steering the proposals through Parliament Share this quote: 

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Agriculture

Commission extends flexibilities of Common Agricultural Policy checks for 2021

EU Reporter Correspondent

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With restrictions still in place across the EU, the Commission has adopted rules to extend to 2021 flexibilities for carrying out checks required for Common Agricultural Policy (CAP) support. The rules allow the replacement of on-farm visits with the use of alternative sources of evidence, including new technologies such as satellite imagery or geo-tagged photos. This will ensure reliable checks while respecting the restriction of movement and minimizing physical contact between farmers and inspectors.

Furthermore, the rules include flexibility around timing requirements for checks. This allows member states to postpone checks, notably to a period when movement restrictions are lifted. In addition, the rules comprise a reduction of the number of physical on-the-spot checks to be carried out for area and animal-related measures, rural development investments and market measures. These rules aim to ease the administrative burden of national paying agencies by adapting to current circumstances while still ensuring necessary controls for CAP support. More information on the CAP's management and control systems is available here. More information is also available here.

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