Weak economic forecast shows we cannot afford austerity or record interest rates

Europe’s weakening economy shows we cannot afford record interest rates or a return to austerity, trade unions are warning in response to the European Commission’s latest forecast.

The Winter 2024 Economic Forecast published today by the European Commission states:

“The EU economy has entered 2024 on a weaker footing than expected.”

“In 2023, growth was held back by the erosion of household purchasing power, strong monetary tightening, the partial withdrawal of fiscal support and falling external demand.”

“The decline in headline inflation in 2023 was faster than expected, largely driven by declining energy prices.”
Responding to the forecast, ETUC General Secretary Esther Lynch said:

“This forecast makes clear the economy desperately needs investment and not record interest rates or restrictive fiscal rules.”

“Against this background, it would be an act of economic self-harm if EU policymakers continue with their plans to reintroduce austerity measures.

“The forecast also shows record interest rates are badly damaging the health of the economy while playing only a marginal role in the reduction of inflation.

“That’s no surprise when the European Central Bank’s own research shows inflation has been driven primarily by corporate profits, particularly in the energy sector, rather than consumer spending.

“EU policymakers should stop dragging us towards an avoidable recession based on outdated economic dogma and respond to the evidence in front of them by supporting investment.

"We need a permanent EU investment instrument with sufficient resources to ensure all member states and regions can meet EU objectives, in particular social progress and a just transition to a green economy."

The ETUC is the voice of workers and represents 45 million members from 93 trade union organisations in 41 European countries, plus 10 European Trade Union Federations.

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