EU economy is top priority: Barroso
European Commission President Jose Barroso said efforts to bolster the economy are the region’s "No. 1 priority" as unemployment threatens to rise above 10pc.
“The European economy is at a delicate moment,” Barroso told the European Parliament today in Strasbourg, France. “Determined action has succeeded in preventing the worst, but we still face the risk that unemployment will continue to rise.”
Companies across the 16-nation euro region continue to cut jobs and reduce costs to shore up earnings as the economy recovers from the recession. The jobless rate unexpectedly increased to 10pc in November, the highest in more than 11 years, and will average 10.7pc this year, according to commission forecasts.
PSA Peugeot Citroen, Europe’s second-biggest carmaker, said yesterday that it has eliminated 5,700 French jobs, more than a target of 3,550 voluntary departures announced last year. Munich-based Siemens AG, Europe’s largest engineering company, cut its global workforce by 3.6pc in 2009 and last month forecast a drop in 2010 earnings.
“We’re starting to come out of the crisis,” European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday in Brussels. “But there’s a feeling of fragility still as regards the recovery.”
While an index of economic confidence has risen for the past nine months, the gauge hasn’t surpassed its level of mid-2008, when the economy had already slipped into a recession. With unemployment reaching double-digits in November, euro-area retail sales unexpectedly fell 1.2pc that month.
Unemployment in the euro area will climb to 10.9pc in 2011 from the projected 10.7pc this year, the commission forecasts. That would be the highest since the euro-area data began in 1996.
The commission, the EU’s executive arm, forecasts that the euro-area economy, which contracted 4pc last year, will expand 0.7pc this year and 1.5pc in 2011. That compares with average annual growth of 2.1pc in the decade after the euro began trading in 1999.
Europe’s “potential growth” will be reduced if no action is taken, Barroso said. “The challenges we were facing before the crisis are still there.”