EU Warns Recession Worse than Expected
The European Union (EU) warned countries to prepare from the long and deep economic recession that will spread in the whole region. Meanwhile, to cushion the impact of this looming problem, EU said that governments should adopt fiscal policy which can be overall beneficial for the economy.
The European Union (EU) warned countries from the region to expect long and deep economic recession amidst Britain’s second bailout plan to save its banking industry.
According to EU report, the 16 nations which adopted euro will experience its economy to shrink 1.9 percent this year, while entire region will have 1.8 percent decline.
The European Commission also warned that more than 3 million people will lose their jobs this year as banks tighten its lending activity and businesses and households spending continue to fall amidst low consumer confidence.
Economic experts said that fiscal policy by the government will be the only way to cushion the impact of recession, adding that this still poses big risks as more government spending will result to higher deficit.
Meanwhile, EU officials said that government from each European nation should infuse more than € 300 billion or an estimated amount of $398 billion to the banking industry to boost its lending.
The EU officials also said that each state should spend 1 percent of its gross domestic product to boost economic growth to .75 percent this year.
European Central Bank President Jean-Claude Trichet warned nations that this year will be a tough economic time and would only experience slow recovery the next year.
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