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January 2009 | Issue 12
A one-stop shop for the financial crisis

DG ECFIN has created an on-line collection of Communications, press releases, press packs and documents relevant to the ongoing economic crisis. Arranged chronologically, the collection is focused on international and EU-level policy responses to the developing crisis and the actions proposed by the EU institutions. It forms a useful resource for the informed general public, economists and the press on the concerted measures taken by national governments, the ECB and the European Commission to restore confidence and sustainability to financial markets.

 


January 2009 | Issue 12
Appointment of new Director-General for ECFIN

On 4 December, Marco Buti was appointed Director-General of DG ECFIN. A trained economist with degrees from Florence and Oxford, Mr Buti – an Italian national – has spent much of his career within the DG, most recently as Deputy Director-General and Director responsible for the economies of the Member States. He has been visiting professor at the Université Libre de Bruxelles, the University of Florence and at the European University Institute, and has published extensively on EMU, macroeconomic policies, welfare state reforms, and unemployment in Europe.

 

 


January 2009 | Issue 12
Quality of public finances workshop

On 28 November, a workshop was organised by ECFIN on the links between fiscal policy and long-term economic growth. It discussed how a better quality of public finances can help Europe’s economies cope with the dual challenge of ageing populations and globalisation. Specific policy responses advocated included growth supportive, non-distortionary tax systems, sound fiscal governance, and efficient and effective public spending and investment. The papers presented at the workshop will be published in DG ECFIN’s Occasional Paper series.

January 2009 | Issue 12
Country seminar on Hungary

On 3 December, DG ECFIN organised a seminar in Brussels on ‘Hungary’s Economic Policy Challenges: From Crisis Management to Sustainability’. Hungary is now at an important and critical juncture in economic policy-making. With disappointing GDP growth and one of the EU’s highest budget deficits, despite significant adjustment and reform efforts, Hungary has been hit hard by the financial crisis. As well as looking at contributory factors and responses to the crisis, the seminar focused more particularly on medium- and long-term developments and challenges – notably, how to raise Hungary’s growth potential.


January 2009 | Issue 12
‘Major opportunities in demographic change’

Speaking at the 2nd Demography Forum, on better societies for families and older people, Commissioner Joaquín Almunia described ageing as one of the greatest forces that will reshape economies and societies in the 21st century. On current policies the impact of ageing will halve the average economic growth rate, he said, leading to falling employment levels and increased pressures on public spending on pensions and healthcare. This means that substantial modernisation of economic and social models is called for which should change the way we perceive the process of growing old as well as ensuring the sustainability of public finances today. “But I am optimistic,” he concluded. “We can prepare for demographic change even in today’s difficult economic climate.”


January 2009 | Issue 12
“Powerful, systematic and also pragmatic”

This is how Commission President José Manuel Barroso described the European Economic Recovery Plan – proposed by the Commission on 26 November 2008. He also underlined that exceptional times call for exceptional measures. The plan realises the particular strength of the EU, its ability to help partners work together while avoiding one-size-fits-all solutions, he said. Pointing to the different ‘macroeconomic starting positions’ in the Member States, he stressed the need for flexibility, “everyone is suffering from this crisis and everyone needs treatment. But not everyone needs the same kind of treatment.” The plan calls for an EU-wide fiscal stimulus amounting to €200 billion that involves relieving short term pain while taking longer-term measures to cure problems at source.


January 2009 | Issue 12
Darkening horizons

The Commission’s autumn economic forecasts predict growth coming close to a standstill in the EU and the euro area in 2008-2010. And while the financial crisis is buffeting EU economies, the situation is being aggravated by housing-market corrections and fading external demand. The situation remains precarious, say the forecasters. In the real economy this means that job creation, which lifted employment by 6 million in 2007-2008, will increase only marginally over the forecast period. And unemployment is expected to rise by 1% from its lowest level in more than a decade. “We need coordinated action at the EU level to support the economy similar to what we have done for the financial sector,” said Commissioner Joaquín Almunia, calling for a joint approach to boost investment and sustain employment.


January 2009 | Issue 12
End-of-year report: the QREA

The December issue of the Quarterly Report on the Euro Area reviews recent economic developments with a special emphasis on the impact of the financial turmoil. It assesses the magnitude of the associated rises in households’ and corporations’ financing, analyses the possible impact of changes in bank loan supply on real activity, and discusses the impact of financing constraints on business investment. The report also provides an analysis of fiscal windfalls. Its focus section presents the LAF (Lisbon methodology working group (LIME) assessment framework) methodology that helps to determine reform priorities in the context of the Lisbon Agenda.

 
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