With the European Union still being battered by the worldwide recession, the European Commission has approved a 138 billion Euro budget for 2010, with nearly half being devoted to promoting economic growth in the wake of the worldwide recession. Just under 45 percent of the budget will be devoted to policies designed to foster growth and employment, and to improve the bloc’s competitiveness on the world stage.
“This budget targets measures to help avert an even sharper downturn,” said Siim Kallas, the commissioner in charge of the EU budget. Kallas said 62 billion Euro is to be spent on jobs, infrastructure and competitiveness, and a further six billion on research and innovation. The second- largest spending area, 31.6 percent, concerns direct aid and market-related expenditure. Planned spending in 2009 totaled 116.7 billion Euro, so the spending plans, still to be approved by the European Parliament, represent a 4.7 percent increase on 2009.

The bloc’s 27 member states are set to commit 1.18 per cent of their gross national incomes (GNI) to the EU executive in Brussels. Governments are committing a total of 11 billion Euro to support their agricultural sectors, while 5.7 percent of the total budget is devoted to the EU’s administrative costs, including salaries and pensions paid to its functionaries. About one billion Euro is to be spent on projects to fight crime, terrorism and manage migration flows. The EU’s 12 newest member states are now set to receive a bigger slice of the EU’s cohesion and structural funds - 52 percent. The mostly Eastern European countries received just 47 percent of those funds in 2008.
Nearly all the budget is set to be re-invested on the bloc’s 27 member states, with eight billion Euro, or 5.7 percent of total commitments, going to the EU’s neighbours and to developing countries around the world. The budget also takes into account about half of the five billion Euro in energy and broadband infrastructures projects that were approved by member states after months of wranglings earlier this year. Of this total, 2.6 billion Euro is being taken from the 2009 budget. The budget forecasts both commitments - legal pledges by member states to provide financing - and payments - actual cash or bank transfers to the beneficiaries.

National governments are in return set to receive 122.3 billion Euro, or 1.04 percent of their GNI, from Brussels. Nearly 45 per cent of spending will be devoted to policies designed to foster growth and employment and boost the bloc’s competitiveness. “This budget targets measures to help avert an even sharper downturn,” said Kallas. Governments are also set to receive 11 billion Euro to support their agricultural sectors while 5.7 percent – some 7.866 billion Euro - of the total budget is devoted to the EU’s administrative costs, including salaries and pensions paid to its functionaries. The budget also takes into account about half of the five billion Euros in energy and broadband infrastructures projects that were approved by member states after months of wranglings earlier this year to boost the bloc’s economic recovery. Of this total, 2.6 billion Euro is being taken from the 2009 budget.

COUNTRIES LOOKING FOR REBOUND

Across the EU, there were mixed signs of continued worry, but some optimism that this year could result in a turnaround that would lessen the need for further government intervention at the country and EU level. German consumer confidence is holding steady, a survey showed, helped by hopes of an improving outlook for Europe’s biggest economy and rising income expectations. The Nuremberg-based GfK marketing group said its forward-looking consumer confidence index for May came in at 2.5 points - compared to an upwardly revised April reading which was also 2.5 points.
This was despite forecasts of a dramatic slump in the German economy this year and the threat of escalating unemployment as companies lay workers off in the face of falling production and contracting orders. Analysts had expected the GfK index, which is based on around 2,000 German households, would slip to 2.3 points in May. “The consumer climate remains robust overall, despite an economic environment which is generally recessive,” GfK said in a statement.

“However, the index remains at a very low level.” The index comes on the back of some forecasts that the global economy could start to emerge from the current downturn towards the end of the year. It also comes in the wake of bigger-than-expected rises in both a key German business climate index and an investor confidence report. A breakdown of the GfK survey for April showed German consumers’ economic expectations rose to minus 31.2 from minus 32.8, while income expectations increased to minus eight from minus 11.4 as falling inflation helped to underpin the mood in the nation’s households.
However, underscoring the current economic uncertainty, the survey said consumers’ propensity to spend declined to 12.4 from 13.9. Annual inflation in Germany climbed to 0.7 percent April from 0.5 percent for the year ending in March, according to preliminary figures. Increased spending on fuel and package tours during the Easter holidays, accounted for the rise, the Federal Statistics Office said, citing data from six of Germany’s federal states. The March inflation rate was the lowest in nearly a decade. Experts estimate the inflation rate will slow to around zero in the coming months, mainly as a result of energy prices slipping back from record levels recorded in mid-2008.

Spain went deeper into a recession in the first quarter, with gross domestic product (GDP) shrinking 1.8 percent compared to the last quarter of 2008, the Bank of Spain said. The economy contracted 2.9 per cent over 12 months in its steepest decline since the 1970s. A recession caused partly by the collapse of a property boom is being aggravated by the persistence of the international slowdown, the effects of which have not been offset by falling inflation and interest rates, the bank said. Spain’s unemployment rose to 17.3 per cent in the first quarter, by far the highest in the European Union. Curiously, Spanish banks were among the least affected by the crisis started by a sub-prime mortgage collapse in the United States that quickly spread to EU banks who had exposure in the American markets, although Spain’s major banks had avoided that type of investment in the US.

Unemployment in Poland rose to 11.2 per cent in March compared with 10.9 in the previous month, the Central Statistical Office said - as the global recession makes itself felt in the country. There were some 40,000 more unemployed registered in March than the previous month, an official said, with the biggest unemployment rises in sectors like clothing, vehicle and furniture production. Retail sales also fell by 0.8 percent in March compared to the same period the previous year.