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The Economic Situation in the Community. Communication by the Commission to the European Council meeting in Dublin, 29-30 November 1979. COM (79) 681 final, 19 November 1979

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  • Economics


CO~. ~ISSION OF THE :UROPEAN COMMUNITIeS er:J.I:S.uJ.f; 19('9 , CO f1 (If )6i" pa/l' The Economic Situation in the Communit~ ~Communitation by the Commission to the European Council meeting in Dubl in, 2?-30 November 1979) P'OYhllond ~......: Auo !lela Lol200, 8-10411 a.......... - Telephone 7:)IOOO4017:)(UIO40-T~8Phk:' -- " COM lEY PI erv-."T......; "'21877 COMiU ..."' The Economic Situation in the Community In addit ion to the European economies f own prOblems, the rise in the price of oi l and the recessionary tendencies developing in other industrialised countries allow only modest objectives for the Community as, a whole to be looked for : real GDP growth decelerating from 3 % in 1979 to 2 % in 1980; price inflation rising to 9 % in 1980 on average, with decelerat ion in the course of the year; a swing in the balance payments current account from the surplus in 1978 to deficits in both 1979 and 1980; and a renewed rise in unemployment in 1980, after the tel .'" tive succes.s in arresting its increase in 1979. This prospect can hardly be considered satisfactory, even if better than the performance recorded by the Community economy following the 1973 oi l pr ice shock. Further , the realising of this modest outcome requires that econoMic: policies conform ",ith c;ertain fungameflhl principles (i) (ii) (ii i) in a first phase of policy incomes have to be constrained so that consumers absorb the increased cost of energy and secondary incre.ases in inflation are avoided; meanwhile monetary policy should be kept strict, and budgetary pol icy should at this stage provide only very limited compensation for the effects of the oil price rise; as and when 'certain positive results are assured as regards inflation, then policy could eventually in the course of 1980 be adjusted into a more actively support ive postute, notably if investment and consump" tion were also found to be weakening significantly; energy policy must in any case be

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