15. 5. 75 Official  Journal  of the  European  Communities No C 108/35 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the present  economic  situation  in the Community  and  the cyclical  policy 
to be pursued 
In accordance  with  Article  20 (3) of its Rules  of Procedure,  the Economic  and  Social 
Committee  has  decided,  on 18 October  1974,  to draw  up a supplementary  Opinion 
of the  abovementioned  subject. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  drew  up its Opinion  at its 128th  plenary  session, 
held in Brussels  on 26 and  27 February  1975. A. LEGAL  BASIS  FOR  THE  OPINION 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, HAS  ADOPTED  THE  FOLLOWING  OPINION 
Having  regard  to Article  20 (3)  of its Rules  of 
Procedure; by a majority,  12 votes  against  and  nine  absten-
tions  : 
Having  regard  to the Opinion  of the Committee  on 
the annual  report  of the Commission  on the economic 
situation  of the  Community  (*); 1. Introduction 
Having  regard  to the  Opinion  of the  Section  for 
Economic  and  Financial  Questions  of 4 February 
1975,  and  the report  by Mr De Bievre,  Rapporteur; 1.1. As  indicated  in the  report  accompanying 
this Opinion,  the Community  enters  1975  after  what 
has generally  been  a very  unsatisfactory  year  in 
economic  terms.  1974  brought  a slowing  down  of 
economic  activity,  an increase  in inflation  rates  and 
the price  of oil, a rise  in unemployment,  a worsening 
in the  balance  of payments  of certain  Member Having  regard  to the discussions  at its 128th  plenary 
session  of 26 and  27 February  1975,  s itting  of 26 
February  1975, 
C) OJ  No  C 142,  16.  11.  1974,  p. 10. 
No C 108/36 Official  Journal  of the  European  Communities 15. 5. 75 
States,  and  increasing  disparities  between  the  eco-
nomic  performances  of Member  States. 
1.2. The  circumstances  of Member  States  have 
undergone  considerable  changes.  Some  are of such 
magnitude  that  they  are  already  affecting  the struc-
tures  of the economies  so that  large-scale  redeploy-
ment  and  reorientation  are  urgently  necessary. 
There  is still  very  great  uncertainty  about  how  the 
economic  situation  will  develop  in 1975. 
1.3. Nevertheless,  the  Committee  has  attempted 
to pinpoint  short-term  economic  policies  for over-
coming  the  economic  and  social  difficulties  of the 
Community. 
1.4. Some  of these  problems  are  structural  and 
arise  from  the  situation  described  in the  report; 
they are  of such  importance  to the  economies  of 
Member  States  that  they  require  immediate  action, 
even  if final  solutions  in many  cases  can  only  be 
found  in the  medium  term  and  at Community 
level. 
1.5. The  short-term  economic  measures  proposed 
for solving  these  problems  are dealt  with  in the first 
chapter  of this  Opinion.  The  second  chapter  sets 
out measures  in the area  of general  cyclical  policy. 
1.6. Though  these  various  economic  measures 
have  to be approached  as interrelated  and  inter-
dependent  steps,  some  of them  require  special 
attention  if they  are  to be successful. 
2. Cyclical  policy  measures  in respect  of pressing 
structural  problems 2.1.3.  One  of the  consequences  of this  rise  in 
prices  has  been  a deterioration  in the terms  of trade 
and balance  of payments  of the Member  States.  A 
series  of measures  are  needed  to  solve  these 
problems. 
2.1.4.  Although  Member  States  are preparing  to 
cut down  their  oil  consumption  by  conserving 
energy  and  by turning,  to some  extent,  to indigenous 
sources  of energy,  most  of them  will  have  to face 
the prospect  of a balance-of-payments  deficit  on 
current  account  for  a number  of years  to come. 
Consequently,  they  must  make  efforts  to reduce  this 
deficit  as soon  as possible,  by taking  the  measures 
in the  area  of energy  conservation  and  production 
mentioned  above,  and  by exporting  a greater  pro-
portion  of their  production  (x). 
2.1.5.  As  a result  of the  increase  in petroleum 
product  prices,  the Community  is running  a balance-
of-payments  deficit  of unprecented  size.  The  possi-
bility  of a succession  of such  deficits  can  certainly 
not be ruled  out,  and  the  problems  posed  by their 
financing  are  likely  to affect  the  Community's 
economy  well  beyond  1975. 
2.1.6.  In  view  of this  situation,  the  Member 
States  will  have  to show  solidarity  and  pursue 
economic  policies  which  are  both  convergent  and 
appropriate  to the  particular  situations  prevailing 
in their  countries. 
2.1.7.  In  particular,  the  Member  States  must 
eschew  unilateral  measures  which  are restrictive  and 
protectionist  and  which,  by squeezing  economic 
activity  and  trade,  will  accentuate  the  recession. 
2.1. Energy 
2.1.1.  The  rise  in oil prices  has  had  a serious 
effect  on the overall  cost  of energy,  and  thus  on the 
consumer  price  index. 
2.1.2.  The  automatic  effects,  both  direct  and 
indirect,  of the  increase  in oil prices  on consumer 
prices  are estimated  to be as follows  on the basis  of 
input-output  tables: 
— France  +4-5  % 
— Germany  +3*5  % 
— United  Kingdom  +5*5  % 
— Netherlands  +2'5  % 
— Belgium  +4-0  % 
— Italy  +5*0  % 2.1.8.  In  view  of the  present  and  foreseeable 
economic  situation  and  given  the  sheer  size  of the 
problems  that  have  to be solved,  it is urgently  necess-
ary to create  Community  and  international  machi-
nery  which  will  make  it possible  to tap  the  funds 
held by oil-producing  countries,  whose  economies 
will,  in most  cases,  be unable  in the  short  term  to 
absorb  more  than  a small  percentage  of the  capital 
at their  disposal.  In  particular,  it is necessary  to 
encourage  oil-exporting  countries  to invest  and  lend 
a greater  proportion  of their  financial  surpluses  on 
a long-term  basis.  The  purpose  of these  measures 
would  be  to ease  the  short-  and  medium-term 
difficulties  which  Member  States  and  other  oil-
importing  countries,  particularly  developing  coun-
tries,  are having  in financing  their  deficits  on current 
account. 
(Estimates  not  available  for  the  other  Member 
States). (*) Committee's  Opinion,  OJ No C 125,  16. 10. 1974. 
15. 5. 75 Official  Journal  of the  European  Communities No C 108/37 
2.1.9.  The  Committee  considers  that  the decision 
to raise  a Community  loan  is a step  in the  right 
direction.  To  be really  effective  this  measure  will 
subsequently  have  to be adapted  to the scale  of needs 
and take  account  of the steps  currently  being  taken 
in the IMF,  and  those  which  will  hopefully  be taken 
in the European  Monetary  Cooperation  Fund  and 
other  international  bodies,  to help  solve  this 
problem. 
2.2. Economic  growth 
2.2.1.  The  Committee  takes  note  of the Commis-
sion's  assertion  that,  in the  medium  term,  the 
Community  will  be faced  only  with  a fall-off  in 
the expansion  of GNP  in 1975. 
2.2.2.  The  fact  remains  that  the  massive  rise  in 
oil prices  and  the cost  of other  imported  prime  raw 
materials  since  mid-1973  represents  a real  reduction 
in the potential  wealth  of the Community.  Account 
must  be taken  of this  and  of the  resulting  redistri-
bution  of wealth  among  the  countries  of the 
world. 
2.2.3.  The  Community  will  have  to bear  this 
'loss',  which  is due  to deteriorating  terms  of trade; 
it will  have  to bear  the cost  of foreign  indebtedness 
and of readapting  its production  resources. 
2.2.4.  According  to the  Commission,  the  costs 
mentioned  in the  previous  paragraph  could  aggre-
gate more  than  4 % of the  Community's  gross 
national  product  in real  terms.  This  figure  takes  into 
account  adjustments  in the terms  of trade,  the cost 
of indebtedness  and  the additional  increase  in invest-
ments.  It is an average  for the  Community  as a 
whole,  but  the figure  would  be considerably  higher 
in the  case  of certain  Member  States.  Obviously, 
the adjustment  must  be spread  over  a number  of 
years  and  not  carried  out  immediately. 
2.2.5.  With  the  present  production  structure  it 
will not be possible,  in the very  short  term,  to meet 
in full  the demand  for  capital  goods  from  the oil-
producing  countries  and  elsewhere.  But  the Commu-
nity needs  to import  oil immediately  and  it will  be a 
fairly  long  time  before  it can  finance  its oil imports 
from  its exports  of capital  goods.  In order  to lessen 
the resulting  disequilibrium  between  payments  and 
receipts,  industries  capable  of meeting  this  external 
demand  must  be developed  more  quickly,  while,  at 
the same  time,  priority  should  be given  to the supply 
of capital  goods  to the  home  market.  This  will 
lead to greater  equilibrium  in the  foreign  trade  of the EEC  as well  as in the balance  of payments  of 
individual  Member  States. 
2.2.6.  Adaptation  of the Community's  export  sec-
tors within  a short  period  of time  — a necessary 
part of the  restructuring  redevelopment  — should 
enable  domestic  demand  in the  Community  to be 
improved  and  help  towards  balance-of-trade  equi-
librium. 
2.2.7.  Efforts  must  also  be made  to cut  down 
on imports  of goods  and  services  in sectors  where 
this is possible  (particularly  imported  energy,  as 
mentioned  above)  by developing  the production  of 
goods  and  services  with  a smaller  import  'content', 
e.g. production  of smaller  cars,  development  of 
public  transport. 
Furthermore,  the expansion  of agricultural  produc-
tion in the Community  and  good  results  in the area 
of exportable  foodstuffs  in 1975  could,  by leading 
to a reduction  in imports  of certain  agricultural 
products,  and  an increase  in non-subsidized  exports, 
also help  to solve  the  problem  of imbalances  in 
current  payments  in this  period. 
2.2.8.  The  Economic  and  Social  Committee  is 
aware  that  the  restructuring  mentioned  in the 
previous  section  can,  in the  present  climate  of 
stagflation,  run up against  serious  difficulties  which 
will allow  very  little  room  for manoeuvre  in certain 
Member  States  and  at EEC  level. 
When  deciding  on the  aims  and  intensity  of eco-
nomic  measures  in the  individual  Member  States, 
account  must  at all events  be taken  of their  overall, 
interdependent  impact  at EEC  level. 
2.2.9.  A  problem  exercising  all the economic  and 
social  groups  is how  purchasing  power  is to develop 
throughout  the  period  of adaptation.  A  solution 
must  be found  at both  Community  and  Member 
State  level  in consultation  with  these  various 
groups. 
2.2.10.  A  special  report  could  be drawn  up on 
how purchasing  power  should  develop.  It should 
advise  on what  scope  there  is for  action  at EEC 
level  and  on what  should  be done  at Member  State 
level  inter  alia  by negotiations  between  the  social 
partners. 
2.2.11.  The  current  redistribution  of wealth  be-
tween  States  may  make  it possible  to avoid  a recession, 
No C 108/38 Official  Journal  of the  European  Communities 15. 5. 75 
provided  the  OPEC  countries  agree  to pursue  a 
loans,  aids  and  expenditure  policy  that  will  enable 
the present  phase  of {he  economic  cycle  to be 
weathered  with  the  minimum  of damage  to the 
world  economy.  A conference  between  oil-producer 
and oil-consumer  countries  is called  for.  The 
EEC  — and  not  just  some  of the Member  States  — 
should  play  an important  part  in this. necessary  structural  changes  — may  have  to be 
taken  at a time  when  inflationary  tendencies  have 
not yet been  brought  under  control  in most  Member 
States.  The  measures  should  therefore  be carefully 
planned  and  adjusted  so as not  to obstruct  the 
counter-inflationary  campaign  which  must  be suc-
cessful  if the  abovementioned  objectives  are  to be 
achieved. 
2.3. Creation  of new  jobs  and  labour  mobility 
2.3.1.  In  view  of the  added  difficulties  caused  by 
the decline  in aggregate  demand  and  by the  need 
to restructure  certain  sectors  of the  economy  and 
restore  full  employment,  considerable  efforts  will 
have  to be made  at all levels  in the  near  future. 
2.3.2.  The  individual  human  problems  this  entails 
are enormous.  The  economic  and  social  policy 
required  at national  and  Community  level  needs  to 
be very  carefully  elaborated.  The  problem  is one 
of actively  formulating  a policy  to create  new  jobs, 
facilitate  the retraining  and  the  mobility  of labour, 
and protect  the  purchasing  power  of the  un-
employed. 
2.3.3.  The  problems  of retraining  and  labour 
mobility  are  compounded  by three  factors: 
— sectors  in which  there  is structural  unemployment 
can do little  to retrain  their  workforce  for other 
industries  or services; 
— another  obstacle  to labour  mobility  is the  fact 
that the  harmonization  of social  benefits  as 
between  industries  and  between  countries  is not 
yet very  far advanced; 
— a reform  of the  educational  system  — carried 
out at all its various  levels  — which  will  ensure 
that young  people  are better  equipped  to adapt 
to the  changing  situations  they  will  meet  later 
on in life,  cannot  be expected  to achieve  results 
in the  short  term. 
2.3.4.  Member  States,  however,  are tackling  these 
problems  with  varying  degrees  of success  and  the 
Community,  too,  has  had  some  years'  experience  in 
the retraining  field  thanks  to the  rationalization  of 
its coal  and  steel  industries.  It should  draw  on this 
experience  in tackling  the  redeployment  necessary 
in other  industries. 
2.4. Inflation 
2.4.1.  It  must  be stressed  that  economic  measures 
geared  to the objectives  described  earlier  — in parti-
cular  the  stimulation  of economic  activity  and  the 3. General  cyclical  policy  measures 
3.1. Having  stressed  the economic  importance  of 
the structural  problems  mentioned  earlier  and  of 
the solutions  that  should  be adopted,  the Committee 
feels  that  it is necessary  to indicate  how  the  instru-
ments  of cyclical  policy  should  be deployed  under 
present  circumstances.  It is mainly  a question  of 
creating  the economic  conditions  for full employment 
and controlling  inflation.  Member  States  which  are 
running  balance-of-payments  deficits  will,  in addi-
tion,  have  to try to reduce  these  deficits  by paying 
extra  attention  to export  sectors.  Member  States 
in surplus  will  have  to increase  domestic  demand 
without  stimulating  inflation.  The  measures  taken 
must  pay  particular  attention  to the weakest  sections 
of society.  Economic  policy  must  pursue  these 
objectives,  even  though  not  all of them  can  be fully 
achieved  in 1975. 
3.2. Unemployment  is likely  to remain  at a high 
level  in the  Community  for  most  of 1975,  unless 
suitable  measures  are  taken  on the  lines  of the 
following  suggestions. 
3.3. Employment  and  unemployment 
3.3.1.  In  view  of the  scale  and  extent  of unem-
ployment,  it is incumbent  on all parties  operating 
on the  economic  and  social  front  to take  the steps 
that are  essential  in order  to mitigate  this  state  of 
affairs  as far as is possible.  A number  of measures 
in furtherance  of this  objective  have  already  been 
implemented  or are planned  by the Member  States. 
It should  be examined  under  what  conditions  and 
to what  extent  these  measures  could  be applied 
as a matter  of urgency  or intensified  if they  are 
already  in force.  They  concern  employment  safe-
guards,  the  circumstances  and  periods  in which 
workers  may  not  be made  redundant,  selective  cuts 
in working  hours,  sharing  of short-time  working 
among  workers,  and  restrictions  on  overtime. 
Account  will  have  to be taken  of the  cost  of these 
measures  and  their  impact  on the activity  and smooth 
running  of industry  as well  as on the  economy  as 
a whole  and  its expected  growth. 
15. 5. 75 Official  Journal  of the  European  Communities No C 108/39 
3.3.2.  In  both  the  study  and  the  implementation 
stages,  these  measures  must  be backed  up by a 
policy  of information,  consultation  and  cooperation 
at all levels.  This  is of particular  importance  because, 
once  put  into  effect,  these  measures  — especially 
those  in the social  field  — will  often  be irreversible, 
even  if the  economic  climate  changes  radically. 
3.3.3.  A  more  equitable  distribution  of under-
employment  will  not,  however,  resolve  the employ-
ment  issue.  In each  Member  State,  interested  parties 
should  endeavour  to apply  the  most  appropriate 
measures  in the light  of all the relevant  sectoral,  and 
even  local,  circumstances.  In  addition,  the trap  of 
wanting  to do everything  at once  must  be avoided. 
Unless  we  are  selective,  it will  be impossible  to 
restore  the  economic  prerequisites  for full  employ-
ment.  The  financing  of these  measures  must  not 
have  an inflationary  effect. 
3.4. Production 
3.4.1.  As  regards  the  general  policy  of maintain-
ing production  at the highest  possible  level,  Member 
States  fall  into  two  groups  viz.  those  with  no 
balance-of-payments  difficulties  or a balance-of-
payment  surplus,  and  the  rest. 
3.4.2.  As  far  as the  first  group  is concerned, 
production  of capital  goods  and  internal  consump-
tion should  be encouraged  in order  to eliminate 
cyclical  unemployment  at least,  whilst  all the means 
mentioned  above  should  be deployed  in order  to 
eradicate  structural  unemployment. 
3.4.3.  Countries  with  a high  level  of inflation  and 
a balance-of-payments  deficit  should  direct  their 
efforts  towards  stimulating  investment  and  exports 
in the light  of the  priorities  indicated  in item  2.2.5 
above. 
3.4.4.  In  short,  policies  of Member  States  should 
converge  as far  as objectives  are  concerned  but 
should  be adjusted  to the  situations  prevailing  in 
each  particular  country  as far  as practical  appli-
cation  is concerned.  This  means  that  countries 
running  a deficit  must  take  care  not  to increase  the 
overall  deficit  of the  Community  and  if possible 
reduce  it, whilst  countries  with  a surplus  should 
make  efforts  to alleviate  the difficulties  of countries 
with  a deficit. 
3.5. Investment 
3.5.1.  It  is particularly  in the area  of investments 
that action  must  be taken.  There  is a growing demand  for  capital  goods  which  are  needed  not 
only  to develop  the  oil-producing  countries'  eco-
nomies  and  to reorient  the  Community's  energy 
effort  towards  finding  new  sources  of energy,  but 
also on account  of internal  structural  changes. 
3.5.2.  At  all events,  large-scale  investment  is more 
than  ever  essential,  not  only  for  the  restructuring 
and redevelopment  needed  to reflate  the economy 
and safeguard  employment,  but  also  to combat 
inflation  by increasing  supply. 
3.5.3.  The  propensity  to invest  will  only  develop 
if profitability  prospects  and  outlets  are  satis-
factory. 
3.5.4.  In  this  respect  the situation  varies  from  one 
Member  State  to another.  In  some  Member  States 
the conditions  exist  for a general  economic  revival. 
Others  will  have  to adopt  selective  measures  in the 
light  of the  budgetary  and  other  resources  at their 
disposal.  They  will  have  to choose  where  to 
concentrate  tax relief  and  the  easing  of credit  with 
a view  to stimulating  the  investment  needed  for 
restructuring.  Some  businesses  in these  Member 
States  are in a disquieting  financial  state  following 
the drop  in profits  caused  by rising  costs  and  taxes 
and by the  tightening  up of price  control,  while 
other  firms  are  still  showing  considerable 
profits. 
3.5.5.  Firms  whose  profit  margins  are  shrinking 
are less  able  to finance  from  their  own  resources. 
Furthermore,  the  slump  in stocks  and  shares  in 
most  Community  countries  has  greatly  reduced  the 
scope  for  recourse  to the  capital  market.  As  a 
result  they  have  no alternative  but to take  up credit 
on very  onerous  terms.  This  pushes  businesses 
further  into  debt,  and,  if the economic  situation  has 
deteriorated  as is the  case  at present,  ultimately 
cripples  them  financially.  More  and  more  businesses 
are going  bankrupt  in the  Member  States. 
3.5.6.  Parallel  with  this  general  or selective  revival 
of private  productive  investment,  residential  cons-
truction,  in particular  publicly  assisted  housing,  and 
investment  by  public  authorities  should  not  be 
neglected,  especially  since  they  meet  the  need  for 
structural  and  regional  development.  In  this 
connection  mention  should  be made  of buildings  of 
public  utility,  roads,  the entire  economic  and  social 
infrastructure,  and  in particular  the  social  invest-
ments  capable  of meeting  the qualitative  requirements 
connected  with  future  development. 
No C 108/40 Official  Journal  of the European  Communities 15. 5. 75 
Steps  must  be taken  to ensure  that  the  drive  to 
stimulate  public  and  private  investment  is financed 
by non-inflationary  means. 
3.6. Prices 
3.6.1.  With  regard  to the  price  trend,  we can 
expect  a fall  in the rate  of inflation  in the various 
Member  States,  in so far as the inflation  was  due  to 
factors  external  to the  Community.  This  is pro-
vided  no major  international  upheavals  occur.  The 
internal  causes  of price  rises  need  to be eradicated 
as far as is possible.  Public  authorities  thus  have  an 
important  role  to play  in eliminating  these  internal 
causes  and  their  impact  on prices,  as well  as in 
eliminating  inflationary  trends.  In  applying  re-
development  and  reflationary  measures  account 
must  be taken  of their  effects  on the price  trend  and 
of the inflationary  tendencies  which  are still  strong 
in certain  Member  countries. 
3.7. Incomes 
3.7.1.  In  this  period  of economic  slowdown, 
income  adjustments  pose  a number  of delicate 
problems.  Any  decrease  in overall  purchasing 
power  compared  with  the level  at the end  of 1974 
would,  inevitably,  have  an adverse  effect  on the 
economy. 
3.7.2.  Efforts  must  be made  to maintain  pur-
chasing  power  inter  alia  by special  measures  designed 
to assist  those  without  work  during  this  down-
swing.  A variety  of social  measures  are currently 
in force  in Member  States  and  their  usefulness 
should  be evaluated  from  both  the structural  and 
the cyclical  point  of view. 
3.7.3.  At  all events  the various  countries  should 
try and  align  their  policies  on those  of the Commu-
nity's  Member  States  who  have  succeeded  in main-
taining  a balance,  both  internally  and  externally, 
which  has  enabled  them  to avoid  the high  rate  of 
inflation  which  some  Member  States  suffered  from 
in 1974  and  are  still  suffering  from  now. 
3.7.4.  Income  distribution  and  protection  of pur-
chasing  power  have  a direct  bearing  on savings. 
In order  to protect  the small  saver  from  monetary 
depreciation,  it would  be useful  to provide  for tax 
relief  on the income  from  savings  of persons  whose 
total  incomes  are modest  or average. 3.8. Consumption 
3.8.1.  One  of the objects  of economic  and  social 
policy  is maintenance  of a high  level  of consump-
tion.  More  emphasis  should  be placed  on the 
quality  aspect  by providing  consumers  with  exten-
sive,  impartial  information  on the prices  and  qua-
lities  of the products  and  services  on offer.  Such  a 
flow  of information  would  have  the  additional 
advantage  of helping  to achieve  the  economic 
objective  of more  rational  utilization  of scarce 
goods. 
3.8.2.  Economic  policy  will  have  to ensure  that 
consumption  does  not  have  a negative  overall 
growth  rate,  even  if in certain  areas,  such  as motor-
cars and  the direct  use  of energy  sources,  it must 
of necessity  lead  to an actual  reduction  in the use 
of goods.  Social  measures  designed  to maintain 
consumption  by the  non-gainfully  active  and  the 
temporarily  inactive  sections  of the population  are 
a step  in the right  direction. 
3.8.3.  As  opportunities  to stimulate  consumption 
vary according  to the  situation  prevailing  in each 
country,  it is clear  that  in countries  where  inflation 
is still  very  severe,  new  inflationary  trends  should 
not be allowed  to develop  as a result  of an imbalance 
due to insufficient  production  of goods  for domestic 
consumption  and  the existence  of excess  demand  at 
current  prices.  An  adequate  balance  must  be struck 
in all the  Member  States  between  savings  and 
consumption,  and  savings  must  be adapted  to 
investment  needs. 
3.8.4.  Some  Member  States  will  probably  have 
to resign  themselves  to a very  moderate  expansion 
of private  consumption  in 1975.  In contrast,  others 
will have  to endeavour  to bring  the  increase  in 
private  consumption  more  into  line  with  their  real 
potential  for growth  in GNP. 
3.9. Capital  market  — credit  policy  — interest  rates 
3.9.1.  As  indicated  above,  the capital  markets  in 
the different  Member  States  are  characterized  by 
a fall of between  30 and 50 % in share  indices,  very 
high interest  rates  and  credit  conditions  which  are 
extremely  onerous  considering  the  profitability 
prospects  afforded  by the  foreseeable  economic 
situation  in 1975. 
3.9.2.  Selective  measures  in the credit  field  should 
play a part  in stimulating  the investment  necessary 
for structural  reform,  greater  energy  savings,  more 
15. 5. 75 Official  Journal  of the  European  Communities No C 108/41 
research  into  new  energy  sources  and  increased 
exports. 
3.9.3.  The  situation  as regards  the  expansion  of 
credit  and  the  need  for  such  action  varies  from 
country  to country.  Generally  speaking,  countries 
with  a strong  balance  of payments  have  lower 
rates  of inflation  and  are  in a better  position  to 
expand  credit  and  reduce  interest  rates. 
3.9.4.  In  pursuing  such  an expansionary  policy, 
these  countries  should  indirectly  take  a hand  in 
the development  of the  weaker  Member  States. 
3.10.  Budgetary  and  fiscal  policy 
3.10.1.  The  Member  States'  budgetary  policies 
must  be aligned  on the economic  prospects  for 1975. 
In general,  we can  say  that  certain  Member  States 
should  pursue  a budgetary  policy  which  does  not 
add to the tax burden  affecting  the desired  increase 
in economic  activity.  Increases  in demand  coming 
directly  from,  or stimulated  by,  public  authorities 
should  be concentrated  on areas  where  they  do not 
hamper  the switch  to exports  which  is necessary  for 
the reasons  given  above.  * 
3.10.2.  During  a period  of economic  slowdown, 
the shift  to exports  in these  Member  States  could  be 
financed  more  from  borrowing  than  from  taxation. 
Countries  which  are  faced  with  more  difficult 
domestic  and  external  financial  situations  should 
tailor  financing,  by borrowing  or taxation,  to their 
specific  situations.  Countries  which  have  accu-
mulated  capital  reserves  during  the boom  will  have 
no difficulty  in calling  on these  reserves  without 
creating  a new  drain  on savings. 
3.11.  Balance  of trade  and  balance  of payments 
3.11.1.  Situations  vary  from  Member  State  to 
Member  State.  In  countries  with  a high  rate  of 
inflation,  the balance  of trade  and  the  balance  of 
payments  should  be brought  closer  to equilibrium. 
Intra-Community  aid should  be granted  to countries 
with  high  inflation  rates  if they  are  prepared  to 
pursue  a policy  geared  to greater  domestic  stability, 
but the  possibility  of financial  aid  from  bodies 
outside  the  Community  should  not  be neglected. 
Unemployment  — already  at a high  level  in most 
of the  Member  States  of the  EEC  — must  not  be 
substantially  increased  by what  in some  cases  is 
beginning  to resemble  a situation  of international 
insolvency. 3.12.  Monetary  policy 
3.12.1.  The  monetary  policy  of one  group  of 
EEC  countries  is considerably  different  from  that 
of the  others.  Even  in the present  downswing  the 
Member  States  should  avoid  trying  to stimulate  their 
economies  by  excessive  increases  in the  money 
supply. 
3.12.2.  As  regards  exchange-rate  policy,  some 
Member  States  have  embarked  on  a joint  float 
within  a fairly  narrow  band.  Other  Member 
States'  currencies  fluctuate  erratically  in relation  to 
the dollar  or to the currencies  of other  Community 
countries.  This  situation  makes  it very  difficult  to 
pursue  a coordinated  interest  rate  policy,  to get the 
economy  moving  again,  or to organize  trade  between 
Member  States  on a more  or less  stable  and  compa-
rable  footing. 
3.12.3.  International  confusion  in the  monetary 
field is not conducive  to policies  aimed  at stimulating 
the Community's  economy.  But  it is important  to 
continue  to seek  institutional  and  other  means  of 
restoring  and  maintaining  the international  value  of 
currencies. 
3.12.4.  More  than  ever  before,  one  of the  pre-
conditions  is pursuit  of a domestic  economic  and 
social  policy  which  fosters  stability. 
4. Conclusions 
4.1. This  Opinion  has  highlighted  a number  of 
ways  of tackling  certain  specific  structural  problems 
and certain  general  cyclical  problems.  The  measures 
in question  should  be applied  as a matter  of urgency 
in the Member  States  and  at EEC  level,  and  should 
be duly  coordinated. 
4.2. As  regards  the  structural  measures,  the 
Economic  and  Social  Committee  urges  that  it be 
involved  in the studies  and  the consultations  which 
precede  decisions  at Community  level.  It plans  to 
deliver  an Opinion  in the near  future  on the problems 
of structural  reform. 
4.3. The  Committee  has  made  a number  of sug-
gestions  concerning  general  cyclical  measures.  But 
it considers  that  in view  of the very  fluid  situation  it 
should  be able  to engage  in permanent  consultation 
with  Commission  representatives  and  have  a regular 
No C 108/42 Official  Journal  of the  European  Communities 15. 5. 75 
exchange  of views,  in one  form  or another,  with 
representatives  of the  EEC  Council  of Ministers. 
4.4. The  present  Opinion  is a contribution  to this 
two-way  flow  of information,  which  should  be 
followed  up by regular  contacts.  The  Committee 
is prepared  to organize  its work  accordingly  and  to 
help  in the solution  of the grave  problems  facing  the EEC  by means  of joint  efforts  by all the  economic 
and social  groups. 
Done  at Brussels,  26 February  1975. 
The Chairman 
of the  Economic  and  Social  Committee 
Henri  CANONGE 
ANNEX 
to the Opinion  of the Economic  and Social  Committee 
The following  amendments  were  rejected  during  the discussion: 
Item 2.2.11. 
Amend  the  second  line  to read: 
may make  it possible  to avoid  a recession,  provided  that,  by means  of suitable  agree-
ments,  the  OPEC  countries  pursue  a loans  (rest  unchanged). 
Result  of the vote 
For:  40;  against:  45; abstentions:  11. 
Item 3.3.1. 
Amend  the  penultimate  sentence  to read: 
'They  concern  employment  safeguards,  guaranteed  earnings  and  periods  within  which  wor-
kers may  not  be made  redundant.'  (delete  remainder). 
Result  of the vote 
For:  42;  against:  47;  abstentions:  10. 
Item 3.3.3. 
Delete,  and  replace  by: 
'A more  equitable  distribution  of underemployment  will  not  resolve  the  employment 
issue.  In  order  to tackle  this  issue  and  guarantee  stable  employment  for all workers,  the 
Community  and  the Member  States,  acting  at European  level  and  in each  country,  should 
intervene  more  extensively  in order  to guide  structural  change,  enlarge  the  productive 
basis  of each  country  and  further  overall  development.' 
Result  of the vote 
For:  44;  against:  57;  abstentions:  0. 
Opinion  on the proposal  for a Council  Regulation  on the common  definition  of the 
concept  of the  origin  of petroleum  products 
The text  referred  to the Committee  was  published  in Official  Journal  of the European 
Communities,  No  C 124  of 15 October  1974,  pages  1 to 3. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 22 July  1974,  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  under  Article  198  of the  Treaty  establishing  the European  Eco-
nomic  Community.