22 October 2002 14:10 [Source: ICIS news]
LONDON (CNI)--Economic recovery will not take off as early as expected six months ago, according to a report published on Tuesday by European employers federation Unice.
A drawn-out recovery is expected as inflation has been driven up by price shocks, as cost and price pressure is squeezing profit margins and as investment decisions are postponed, Unice said in its six-month Economic Outlook. Unemployment remains at high levels, limiting consumer confidence, it added.
Gross domestic product (GDP) growth is now forecast at 0.9% for 2002 in the Eurozone and 2.1% for 2003.
Based on a survey of Unice’s member federations in the 15 European Union (EU) member states, the Economic Outlook presents an uncertain economic environment threatened by a weakened US economy, depressed stock markets and a tense political situation in the Middle East.
Unice said European companies are struggling to maintain profitability, find financing at an affordable cost and cope with excess capacity in most sectors. Additional burdens of any kind, particularly taxes and labour cost, must be avoided, it stressed.
Frederik von Dewall, chairman of the Unice European Monetary Union (EMU) working group, explained: “In these circumstances, the best thing to do is lower labour costs to minimise the increase in already high unemployment.”
Unice said it supports economic policy as it stands today, realising that countries with large budget deficits have very little room for manoeuvre. Von Dewall added: “Business support for the independence of the European Central Bank (ECB) is robust.”
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