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   Vol. 67/No. 40           November 17, 2003  
 
 
GDP growth nears zero in ‘euro-zone’
 
BY PATRICK O’NEILL  
Close to zero growth of the gross domestic product (GDP) in 2003—that’s the ominous reality facing the 12 countries that use the euro currency, according to officials of the European Union (EU). The report puts a figure to the experience of millions of working people across the continent who are already unemployed or face a tightening financial squeeze.

Governments in many of these countries are using economic stagnation as cover for a new round of cuts on pensions and other social benefits. On November 1, 100,000 people marched in Berlin to protest a parliamentary vote in favor of a far-reaching program of cuts in the social wage.

Among the dozen euro-zone countries are France, Germany, and Italy. The latter two were officially declared to be in recession earlier this year. All three face official unemployment of around 10 percent. Other countries that make up the euro-zone are Austria, Belgium, Finland, Greece, Ireland, Luxembourg, Portugal, Spain, and the Netherlands.

“The average GDP growth in the euro area is expected to be a mere 0.4 percent in 2003,” said EU finance commissioner Pedro Solbes October 29. That’s half the minimal growth recorded last year. For the EU as a whole, he said, “A somewhat better 0.8 percent is expected.” The United Kingdom, Sweden, and Denmark are EU members but have not adopted the euro.

Solbes warned that the French and German governments were expected to break the guidelines spelled out in the “stability and growth pact”—an agreement Berlin and Paris had imposed on other member governments of the EU. For the third year in a row their budget deficit will exceed 3 percent of GDP. The Financial Times reported that Solbes “also warned that Italy, the Netherlands, Portugal and the UK were dangerously close to the pact’s deficit limit.”

The big-business daily reported that the Austrian and Dutch governments have argued unavailingly that penalties should be imposed on Berlin, Paris, and Rome for their infraction of EU rules.

Both the Italian and German governments have announced new rounds of budget cuts. Italian prime minister Silvio Berlusconi has said that $19 billion has to be slashed from the budget to avoid going over the 3 percent deficit mark. On October 24 several union federations organized a four-hour general strike to oppose the government’s plans to raise the age of retirement.  
 
 
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