Regions fear worst of crisis is yet to come [fr] [de]
Europe's local and regional authorities fear the economic climate next year could be even worse than 2009, according to a new survey. This is despite a return to growth in the eurozone economies and official predictions that the global financial picture will brighten in 2010.
Background
There are signs that the financial crisis that struck the global economy in 2008 is beginning to ease, with stock markets having staged something of a recovery in recent months. France and Germany have already returned to growth and the UK is expected to follow suit by the end of the year.
However, there is concern that while the recession may technically be ending, its impact on ordinary citizens is far from over. Governments are now looking to curb spending and raise revenues in order to plug the large public deficits run up during the crisis.
Earlier this month, a Eurofound report warned that job losses will continue to rise into 2010 as governments scale back temporary measures put in place to stave off unemployment (EurActiv 04/11/09).
Fatigue with the recession has helped spawn a flurry of media articles focusing on the 'green shoots' of recovery, but critics warn it would be premature to expect strong growth in Europe for a number of years.
A new study by the Council of European Municipalities and Regions (CEMR) finds that authorities fear budget cuts will force them to curtail services next year.
Asked about the prospects for 2010, only Cyprus, Norway, Portugal and Sweden - amounting to 6% of the population covered by the survey - express optimism, whereas 44% are pessimistic for 2010 and 50% do not foresee any change.
This is at odds with the view from Brussels, where major institutions are relatively bullish about the prospects for growth next year.
The new study is a follow-up to a survey released in April 2009 and reveals that three quarters of public authorities believe the situation has worsened since the first quarter of the year.
Respondents representing 90% of Europe's population say access to borrowing for investment has not improved since April this year, with the CEMR warning this will put the brakes on investment in infrastructure projects in the meantime.
Local authorities find themselves caught between growing demand for services and pressure to implement budget cutbacks, according to the report.
Social crisis on the horizon
Writing in the report, CEMR Secretary-General Jeremy Smyth said that even if the broader economic picks up, the extent of public sector debt will hit citizens who rely on services provided by local and regional authorities.
"Whereas the European Commission, the European Central Bank and other international bodies believe that 2010 will see an economic and financial improvement in Europe, our local and regional authorities, by a large majority, expect 2010 to be either as difficult as 2009 or worse," said Smyth.
He said the impact on Europeans will be "direct and daily" if services are cut.
While government interventions served to insulate the public from the full wrath of the financial storm that ripped through the global economy in 2008 and 2009, it seems 2010 will be the year that the social impact is likely to be felt.
Wolf Klinz MEP, chair of the European Parliament's committee on the economic, financial and social crises, warns that the fallout from the crisis will be felt long after confidence is restored to financial markets.
"The effects on the real economy have already been substantial, with recession hitting various countries, but the real challenges will only become visible in the coming months. A social crisis is imminent," he said.
Positions
Robert Manchin, CEO and president of Gallup Europe , says surveys show that the impact of the recession varies across Europe and that citizens are only now beginning to feel the real impact of the financial crisis.
"In general, the crisis had much less damaging an impact on Northern European citizens. Furthermore, the crisis had a different effect on rural and urban populations; the relationship between the level of personal hardship experienced and level of urbanisation differed through regions. In some countries, cities were harder hit, while in others rural areas suffered more," he said.
Manchin warns that the experience of citizens does not tally with what political leaders in Brussels are saying. He says that if local authorities fail to deliver services in 2010 due to lack of resources while experts continue to talk about the end of the crisis, "a growing disconnect between citizens' and experts' perceptions of reality is to be anticipated". This could be accompanied by a feeling of injustice that the seeds of economic recovery should be so unequally divided, he adds.
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