UNICE: EU economy shows signs of recovery; competitiveness remains key

UNICE on 13 October released its half-yearly Economic Outlook report, based on a survey carried out by its member federations in the 15 Member States.

The survey shows some encouraging signs of recovery in the second half of 2003 but goes on to say that the rebound is far too slow, due to the EU's failure to tackle underlying problems: unemployment, slow implementation of reforms and fiscal uncertainties. As a result, growth rates in Europe are still 2 per cent lower than in the US.

Member States are urged to implement the necessary reforms more quickly and to renew their commitment to the

Lisbon strategy. Competitiveness is seen as the key to unlock the EU's enormous potential.

The survey shows wide support of the ECB's policies, which have cut inflation and inflation expectations, so that companies and consumers can both have confidence in there being a stable environment and benefit from low interest rates. Moreover, a relatively strong euro will help keep inflation down.

Finally, an erosion of the Stability and Growth Pact could undermine confidence and be detrimental to growth. Member States are therefore called upon to adhere to its rules by showing more fiscal discipline.

The EU's heads of state and government will discuss proposals for a European growth initiative at the European Council on 16-17 October.