Return to bulletin menu
Europe sinks deeper into recession

I can get no remedy against this consumption of the purse:
borrowing only lingers and lingers it out, but the disease is incurable.
2 Henry IV (1.2.74)

Despite the numerous once and for all solutions that have been announced over the past four years the economies of the European Union (EU) continue to stagnate. Indeed, the most recent data points to a significant deterioration rather than recovery, with the Eurozone economy as a whole falling back into recession. 

Continuing recession 

The European Commission has slashed its growth forecast for the 17-member area saying that it expects its economy to contract by 0.4 per cent in 2012 and grow by only 0.1 per cent next year. This represents a worsening from its last forecast, which estimated a contraction of 0.3 per cent in 2012 followed by growth of 1 per cent in 2013. Overall the economy of the 27-member EU is expected to shrink by 0.3 per cent, and then grow by 0.4 per cent in 2013. The contraction of 2012 follows two years of relatively low growth of 1.9 per cent and 1.5 per cent in 2010 and 2011. The EU economy has not been restored to the level of output it had prior to the onset of the financial and economic crisis. Using this criterion it can be stated that there has been no recovery in the EU economy but rather a prolonged and continuing recession. 

The latest figures also show that the recession is becoming more generalised throughout Europe with the powerhouse economies experiencing a significant slowdown. Germany, the continent’s largest economy, is undergoing a significant downturn. Though still in growth its expected output for 2012 has been slashed from 1.7 per cent to 0.8 per cent. According to figures from the German Ministry of Economics industrial production fell by 1.8 per cent in September while factory orders fell 3.3 per cent in the same month. In the first two quarters of 2012 the French economy recorded zero growth and is expected to grow by only 0.2 per cent over the year. The Italian economy moved into recession in the second half of last year. The economy is expected to contract 2.4 per cent this year, with a further decline of 0.2 per cent in 2013. In the third quarter of 2012 the Dutch economy shrank by 1.1 per cent. While the situation in other states, such as Greece and Spain, is worse the common perception of the essentially healthy economies of the European core being dragged down by weakness at the periphery is really no longer tenable. As it progresses it can be seen more clearly as a systemic crisis that reaches across the whole of Europe. 

Rising unemployment 

One of the most striking indicators of the depth of the crisis has been the dramatic rise in unemployment. The EU’s statistics agency announced that unemployment in the Eurozone rose to a record level of 11.6 per cent in September, up from 11.5 per cent in August. With 1146,000 workers losing their jobs that month, the total number of jobless in the Eurozone climbed to 18.49 million. The latest figures for the 27 nations in the larger EU reveal that no fewer than 20 states have recorded increases in unemployment compared to a year ago. The jobless rate is highest in those countries that have been subjected to the most severe austerity measures. One quarter of both the Spanish and Greek workforce unemployed. For young workers in these countries the unemployment rate is over fifty per cent. 

Rising debt 

The crisis in Europe is often defined as a debt crisis with the stated objective of the various solutions put forward to reduce the level of indebtedness within economies. Despite this the level of debt is actually increasing. The measures pursued to tackle the debt crisis - bank bailouts, ultra-low interest rates and savage austerity (which has depressed growth and reduced tax revenue) – have led to burgeoning indebtedness. According to figures released in October a total of 20 EU states have experienced an increase in their debt-to-GDP ratio compared to the first quarter of this year. 


Greece is the country where all the elements of the crisis are seen at their most acute. Its GDP has fallen by cumulative 21.5 per cent since its peak in 2007 and is expected to decline by a further 4.5 per cent next year. Greece’s unemployment rate reached a staggering 25.4 per cent in August. This compares 24.8 per cent in July and 18.4 per cent one year ago. The level of debt continues to rise with estimates that its debt-to-GDP ratio will shoot up to 192 per cent. So severe is the economic decay in Greece that total government revenue will not even cover the interest payments on international loans. The bailouts for Greece are designed to cover lenders rather than offer relief to its people. 

Capitalist offensive 

While Greece is the most extreme example it is not unique. Many states, including Ireland, are already along the “Greek Road”. For there is a generalised capitalist offensive across Europe that has as its aim the complete reversal of the social gains won by workers over the past sixty years. One of the weapons in this offensive is debt. It is being used to strip nations of whatever democratic rights and public wealth they may possess. If workers accept that they have any obligation to pay then they really have no defence. This is why a key demand must be for the repudiation of such debts. There must always a response across Europe (such as we got a glimpse of with the recent coordinated strikes and demonstrations in several countries) for there are no national solutions to this crisis. When we look to Greece, where sections of the state are collaborating with the fascist movement, we see the possible lengths to which the capitalists will go in order to impose their will, and also the urgency of building a movement that can offer an alternative.


Return to top of page