Economic Policy : Etuc Tables Recommendations for a Better Macro-Economic Policy

Article excerpt

Trade unions are concerned that rising interest rates are preventing the economic revival from picking up quickly enough. In a report published together with the Commission's spring economic forecasts on 8 May, the European Trade Union Confederation 'regrets that growth is not moving into higher gear in 2007'. The report blames this on misguided monetary and fiscal policies. 'If the euro area wants to turn low growth into a cycle of high investments and high growth, then a moratorium on further interest-rate hikes needs to be introduced', stressed the confederation. 'The long run starts now, and it should start with full recovery from slump', said John Monks, ETUC General Secretary, adding that 'the European Central Bank and Finance Ministers should be working to strengthen growth further in 2007 instead of removing aggregate demand stimulus'.

The ETUC report highlights that growth in the euro-zone should move into a higher gear after a lengthy slump. 'A normal business cycle would see growth accelerate temporarily above 2-2.5% in order to remove the spare capacity that has accumulated over the years. This is not happening at all. A best-case scenario is that growth in 2007 remains limited to around 2%. In a worst-case scenario, growth falls back significantly below 2% (1. …