Making matters worse, the Commission is flirting with strengthening these labor protections. Such blatant antibusiness policies will only encourage capital flight, weakening the euro and prolonging Europe's downturn. What will make Europe's coming recession particularly robust and resilient are the overlapping natures of events and European policies. Poor policies drive away investment, which weakens the euro. A weakened euro raises the cost of imports, strengthening inflation.
Higher inflation limits new investment, leading to layoffs.
In social-democratic Europe, that triggers support for policies supporting workers rights, which starts the cycle again. The first casualties will be the states to the Union's east that are busy lashing their economic, political and legal systems to the Union's framework. These states will soon discover that while membership has its privileges, it is not risk free. But unlike the Union, they lack the well-funded social support systems that keep Western Europe politically quiescent. Central European states, already struggling to meet rigorous EU accession requirements, will suffer doubly from their prime market's faltering.