EU president says long-term economic outlook "not bright"

09:17, January 08, 2010      

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The European Union (EU)'s first full-time president Herman Van Rompuy warned on Thursday that the long-term economic outlook for the 27-nation bloc is not bright as the financial crisis may depress investment.

"The long-term outlook is not bright," Van Rompuy said at a Christian Social Union party conference in Wildbad Kreuth, Germany, according to a speech text released by the EU in Brussels.

Van Rompuy said the current financial and economic crisis has a potential negative impact on longer-term growth prospects, including a drop in investment on a "permanent basis" and higher "structural" unemployment.

"The worsened financing conditions and higher risk aversion may indeed depress investment on a permanent basis. Should the current rise in unemployment become in part structural, that would have a lasting impact on the quantity and quality of labor," he said.

In response to the crisis, EU governments have taken decisive measures to save their economies from the worst recession since the Second World War.

But Van Rompuy said although those measures proved to be excellent short-term palliatives, what the EU needs now is reforms delivering long-term benefits.

On his first working day earlier this week, the EU's first president called for a special EU summit in February to discuss a new economic plan for the next decade.

Van Rompuy said the EU in the long term has to achieve an annual growth of at least two percent to keep up with the rest of the world, not less than one percent as predicted by the OECD.

"We have to find a way to raise our growth potential," he said, adding that two crucial ways of achieving this are innovation and the quantity and quality of the labor force.

Source: Xinhua
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