Annual Economic Review 1978-79
Total Page:16
File Type:pdf, Size:1020Kb
ISSN 0379-0991 Commission of the European Communities Annual Economic Report 1978-79 Annual Economic Review 1978-79 November 1978 Number 1 'EUROPEAN ECONOMY' appears three times a year, in March, July and November, this being the first issue. The November issue contains the Commission's proposal for the annual report on the economic situation in the Community. This report, which the Council adopts in the fourth quarter of each year, establishes the economic policy guidelines to be followed by the Member States in the year that follows. The November issue also contains the Commission's Annual Economic Review, the background analysis to the proposed Annual Report. In March and July of each year, 'European Economy' will present a review of the current economic situation in the Community, together with reports and studies on problems of current interest for economic policy. A statistical annex containing the main economic indicators on an annual basis since 1958 together with Community budgetary data wi 11 be attached to each issue. Three series of supplements accompany the main periodical: Series A - 'Economic trends' will appear monthly except in August and will describe with the aid of tables and graphs the most recent trends of industrial production, consumer prices, unemployment, the balance of trade and exchange rates. Series B - 'Economic prospects: business survey results', will report upon and describe the main results (orders, stocks, production outlook, etc.) of the monthly survey of industrial chief executives in the Community. It will also appear monthly, with the exception of September. Series C - 'Economic prospects: consumer survey results', will report on the consumer survey, which is carried out thrice yearly (in January, May and October) throughout the Community (except Luxembourg) and measures consumers' opinion on the economic situation and outlook. Subscription terms are shown on the back cover and the addresses of the Sales' Offices are shown on page 3 of the cover. Uni ess otherwise indicated the texts are pub I ished on the responsibi I ity of the Directorate-General for Economic and Financial Affairs of the Commission of the European Communities, rue de la Loi 200, 1049 Bruxelles, to which enquiries other than those related to sales and subscriptions, should be addressed. Statistical conventions: data not available , decimal point. Commission of the European Communities EURIPEAI 11:11111 November 1978 Number 1 Reproduction is subject to acknowledgement of the source Printed in Belgium Catalogue number: CB-AR-78-001-EN-C Contents Annual Economic Report 1978-79 5 Annual Economic Review 1978-79 17 Statistical Annex 83 3 Annual Economic Report 1978-79 (Text proposed by the Commission) Contents Foreword 7 1. Community objectives 9 2. Economic outlook 10 3. Concerted action 11 4. European Monetary System 12 5. Guidelines for 1979 13 5 '·V,. i. Foreword • The present text is the Commission's proposed Annual Economic Report for 1978-79, submitted to the Community institutions1 in accordance with the Council's Decisions2 for attainment of a high degree of convergence of economic policies of Member States. The Council is required in the fourth quarter of each year - on proposal of the Commission and after consulting Parliament and the Economic and Social Committee - to adopt an annual report on the economic situation in the Community and to set economic policy guidelines to be followed by each Member State. Once the Report has been adopted by the Council, the respective governments must bring it to the attention of their national parliaments so that it may be taken into account in budget debates. This year the Commission has also submitted, as background material to the Annual Economic Report 1978-79, an Annual Economic Review 1978-79 which contains a factual analysis of economic developments.3 The latter document is also published in this edition of European Economy. This innovation in the procedures is intended to separate the policy matters on which it is appropriate for the Council to deliberate from background material which is needed for information purposes but is not necessarily a matter for Council decision. Originally document COM(78)529 final, 19 October 1978. Article 4 of Decision 74/120/EEC of 18 February 1974, amended by Decision 75/787/EEC of 18 December 1975. Originally document SEC(78)4033 final, 19 October 1978. 7 1. Community objectives The theme of this report is that, while the economic strengthen the basis for its cooperation with third performance of the Community is in several respects countries. This is illustrated by the positive collaboration improving, the time has come for a stronger development that was in fact achieved in the summer of 1978 between of the Community's central economic mechanisms and the Community and the other participants in the Bonn procedures. This is aimed at enabling the Community to do Western economic summit, as also by the Community's still better in its economic performance in the period intention that the European Monetary System be open for ahead. The objective is to provide a more effective associated participation by non-member States having common framework in both the economic and monetary particularly close economic links with the Community. domains for national efforts to secure the shared Moreover a major purpose of strengthening the Com objectives of high employment and living standards, and munity's economic and monetary policy system is through monetary stability. Put another way round, the objective is achieving a sounder basis for internal growth, to restore to reverse, through action at the Community level, the conditions favourable to a rapid growth of an open world undermining of the effectiveness of purely national trading system, and, thus also to a continuous evolution of economic policy that has resulted from the increased economic structures. This adjustment process must aim at integration of the economies of Member States in the an efficient division of labour between industrialized European and international economy. countries and the fullest opportunity for the growth of developing countries. Thus a strengthened economic and monetary policy is aimed at supporting the positive While intent on building up its economic and monetary adjustment objectives of the Community's trade and system from within the Community is also seeking to sectoral policies. 9 2. The economic outlook The task of adjusting the Community economy to the the experiences of individual Member States. The data for difficult economic conditions prevailing since the oil crisis 1978 contain an element of estimation and forecasting by in 1973 is broadly portrayed in the following data the Commission, and for 1979 they are Commission although, of course, there have been major differences in forecasts on the basis of policies described in this report: The Community economy 1973-1979 GDP Rise Current General Money Unemployed volume in account government supply in growth consumer balance of financial growth labour prices payments, deficits M;iM3 force 'OOO million % % EUA % % % GDP 1973 5,7 8,3 1,6 -0,9 16,5 2,5 1974 1,7 12,8 -9,2 -1,7 12,8 2,9 1975 -1,7 12,8 1,2 -5,2 12,7 4,4 1976 4,9 10,0 -6,3 -3,7 11, 1 5,0 1977 2,3 9,1 1,7 -3,2 12,5 5,5 1978 (2,6) (6,9) 8,3 (-4,1) (5,7) 1979 (3,5) (7,0) (8,5) (-4,5) (5,6) and the current-account payments situations have become much more balanced (the deficits of France, Italy and the volatile stop-go in the Community economy, which has to United Kingdom have been reduced or reversed, and be avoided in the future. The period ahead is seen as being Belgium and the Netherlands have moved into balance or one of gradual rather than dramatic economic recovery. slight deficit-although the surplus of the Federal Re The growth-rate is now strengthening, and valuable public of Germany has not declined). Unemployment improvements have been made in price performance and appears to have peaked in the Community as a whole, and in the external payments situations. The dispersion of progress is beginning to be made in some Member States inflation rates has been reduced as well as the average, for its reduction. and the current-account payments situations have become 10 3. Concerted action The stronger economic outlook for 1979, with a prospect of the antidote to these problems must, at least in part, real growth of nearly 3%%, is partly due to the concerted be to pool national initiatives into a broader and action decided by the Council on 24July 1978, 1 in coherent Community action, and so to restore the implementation of the conclusions of the European prospect of favourable multiplier effects, a more rapid Council of 6-7 July 1978 meeting in Bremen, and of the fiscal pay-back to demand management moves, and Western economic summit of 16-17 July in Bonn-at which create a higher probability of inducing the positive the Community was represented by the President of the real response from the private economy, rather than Council and the President of the Commission. an aggravation on monetary instability. The meetings in Bremen and Bonn decided on a broad Beyond these general principles, however, the present range of policies beyond budgetary and monetary policy, Community action is more ambitious and concrete in and notably in Bremen on specific measures to promote further respects. employment, to strengthen the Community's energy situation, to facilitate structural change in industry and the There is the particular case of Member States whose Mediterranean region, to strengthen the open world economies are in the greatest need of monetary stabili trading system and to aid the developing countries.