No C 248/32 Official Journal of the European Communities 17. 9. 84 
B. The following passages of the revised Section opinion were deleted as a result of amendments 
Point 1.1, second paragraph, last sentence: 
'Producers in some Member States are therefore in a position to switch between vegetable and 
cut-flower production.' 
Voting: 
For: substantial majority. Against: 2. Abstentions: 3. 
Point 1.4, second paragraph, first and second sentences: 
'On the basis of these statistics the Committee would look favourably at any measures designed to 
protect the income of producers who have been excluded from market organizations. It notes that 
there is a close resemblance between production methods for cut-flowers and those for certain 
fruit and vegetables. This resemblance is however less relevant as regards consumption and the 
objectives of the CAP.' 
Voting: 
For: Substantial majority. Against: 4. Abstentions: 8. 
Opinion on the economic situation of the Community (mid-1984) 
(84/C 248/17) 
A. LEGAL BASIS FOR THE OPINION 
Council Decision of 18 February 1974 on the attainment of a high degree of conver­
gence of the economic policies of the Member States of the European Economic Com­
munity (•) 
At its 212th plenary session held on 23 and 24 November 1983 the Committee, acting 
on a proposal from its Bureau in accordance with the fourth paragraph of Article 20 of 
its Rules of Procedure, decided to deliver an opinion on its own initiative on the above 
matter. 
Procedure 
The Section for Economic and Financial Questions, which was instructed to prepare 
the work on the matter, adopted its opinion on 26 June 1984 in the light of Mr Pelle-
tier's report. 
The Economic and Social Committee adopted its opinion at its 218th plenary session 
(meeting of 5 July 1984) by a large majority, with four votes against and seven absten­
tions. 
1. Introduction 
By comparison with mid-1983, when the Committee 
last assessed the economic situation, there are more 
(') OJ No L63, 5.3 1974, p. 16. encouraging signs of increased economic activity 
throughout the Community, although some Member 
States seem to be affected more than others. Observ­
ers nevertheless wonder whether the trend has 
changed for good, since it is still extremely vulner­
able to external factors inter alia the budgetary and 
monetary policies pursued by the United States. In 
17. 9. 84 Official Journal of the European Communities No C 248/33 
all the Member States the recovery is handicapped 
by the extreme uncertainty of the world situation. 
Such doubts about cyclical factors apart, there is 
also cause for concern about the structural weak­
nesses of a Europe that is losing momentum in a 
fiercely competitive world in the throes of major 
human, social and technical changes. 
The Committee has made it clear that it would not 
like to be tied down to a mere description of the 
economic situation but would like to address itself, 
albeit in summary form, to a number of fundamen­
tal problems; it would also attempt to put forward 
one or two concrete recommendations. 
One of the essential questions to be asked is whether 
the Community can implement a genuinely effective 
economic strategy. The Committee considers that 
such a strategy is possible with the current institu­
tional set-up of the Community. No consideration 
has been given here to the problem of institutional 
reform. 
Steps to solve Europe's structural problems would 
significantly hasten the economic upturn and allevi­
ate unemployment. One of the Committee's major 
concerns is a speedy, sustained recovery in growth, 
which would make it possible to combat unemploy­
ment. This means that the spotlight must be turned 
on proposals likely to stimulate job-creating invest­
ment. 
The opinion is also concerned to emphasize Eur­
ope's identity both with regard to the international 
monetary system and the Community's common 
commercial policy. 
2. Economic activity 
2.1. Economic recovery 
When the Committee drew up its previous opinion 
in July 1983, the figures available contained few 
signs that there would be any marked improvement 
in the Community's economic situation. Perfor­
mance in 1983 as a whole bore this out. 
Available economic indicators and Commission sur­
veys suggest a rise in GDP of 2 % in 1984 (in volume 
terms) although this situation must not blind us to 
the considerable differences between Member States of the Community. Moreover, the upturn is far 
behind that of the United States or Japan. 
There are major sectoral differences in the Commu­
nity's economy as a whole and a large number of 
industries are still suffering from structural difficul­
ties: steel, shipbuilding, the building industry, the oil 
industry. 
Unemployment showed a further rise in 1983, while 
employment declined again. No major improvement 
can be expected in the Community labour market in 
1984. 
2.2. A precarious and purely relative recovery 
The Community is gradually re-establishing its bal­
ance on current account as a result of an improve­
ment in the balance of traded goods and services. 
The negative balance on factor income and unila­
teral transfers, however, deteriorated further in 1983 
and will remain a cause for concern in 1984. Mas­
sive recourse to foreign borrowing means that debt 
servicing absorbs a large proportion of the resources 
of several Member States, and the latter have had to 
draw heavily on their foreign exchange reserves. 
The recovery is severely handicapped by the weak­
ness of the Community's internal markets, whilst the 
massive debt burden of the developing countries 
and a significant number of State-trading countries, 
which are major traditional outlets for Community 
industries, is also slowing down the recovery in the 
Member States. 
2.3. Little scope for influencing the economic situa­
tion 
An analysis of the economic situation in the Com­
munity shows that the EEC has lost a lot of room for 
manoeuvre in the choice of means for influencing 
the economic situation. These means must therefore 
be put to optimum use. 
The campaign against inflation is an objective com­
mon to all Member States. Significant progress has 
been made here, since the Community's 1984 infla­
tion rate is expected to average just over 5 %. This 
campaign requires the Member States to exercise 
administrative stringency and to curb their in­
debtedness and budgetary expenditure, including 
current expenditure (civil service pay, defence, etc.). 
No C 248/34 Official Journal of the European Communities 17.9.84 
The trend in expenditure on social welfare, particu­
larly on health care, is creating intractable pro­
blems. 
Monetary policy, one of the main economic instru­
ments, is to a large extent dictated by the constraints 
of the foreign exchange market and the need to fight 
against inflation. 
It is also noticeable that when Member States are 
subjected to similar constraints, they now adopt very 
similar methods of regulating the economy. 
3. The Community's structural weaknesses 
3.1. Dependence on the outside world 
The Community remains dependent on commodity 
imports, particularly oil. 
The Community's behaviour is heavily influenced 
by American economic policy, in particular fluctua­
tions in dollar exchange and interest rates. This state 
of dependence is highly prejudicial to the Commu­
nity. 
3.2. Industrial production and productivity 
Europe's production of goods and services is more 
dependent on traditional industries, than is the case 
in Japan and the USA. It therefore adjusts more 
slowly to technical innovation. 
In volume terms, Community industrial production 
in December 1983 was 116,0 (1975 base = 100) as 
against 132,8 for the United States and 152,3 for 
Japan. 
Nevertheless the OECD standardized statistics show 
that productivity has risen much faster in the EEC 
than in the United States. A detailed analysis of 
these statistics, however, reveals that this situation is 
often accompanied by massive labour-shedding in 
the declining European industries rather than by an 
expansion in the high-productivity sectors. At any 
event labour productivity is higher in the USA than 
in Europe. 
3.3. Inadequate investment and obsolescent plant 
In parallel with the recession the average net invest­
ment rate as a percentage of GDP has fallen steadily in the Community in recent years. From 12% in 
1974 it had dropped to 6,7 % in 1983. 
This sluggish level of investment results in ageing 
plant, a decline in production capacity and a slow­
ness to adapt to new technologies; it thus adversely 
affects the future competitiveness of enterprises in 
the Member States of the Community. 
Apart from weak demand, inadequate business pro­
fitability is a further cause of the fall in investment 
and the slow pace of economic recovery. Savings 
have found higher interest, lower-risk placements 
outside productive activity. 
Generally speaking the recession has resulted in a 
lack of liquidity and a shortage of internal funds 
particularly in the case of small and medium-sized 
firms. This has weakened investment capacity. In 
1983 the results of Community undertakings did, 
however, improve slightly. 
3.4. Very high public spending 
Total public spending, including deficit-financing, 
averaged out at 52 % of GDP in the Member States 
of the Community in 1983, whereas it was only 
35,4% in the United States (in 1981) and 34% in 
Japan. 
These figures must be treated with caution, given the 
major differences in expenditure patterns in the 
Member States. Care must be taken to ensure that 
investment in the Community is not detrimentally 
affected by excessive taxation, social security 
charges, etc. On the other hand, given unemploy­
ment trends and the adverse effects of further cuts in 
social security benefits inter alia on demand pat­
terns, considerable prudence must be exercised as 
regards cut-backs in expenditure on social policy. 
3.5. Scientific research 
Research in the Community is not up to the chal­
lenges set by the world of science. 
The problem does not lie in the volume of expendi­
ture committed — which is similar to that of the 
United States and twice that of Japan — but in the 
spread of resources over a large number of enter­
prises and organizations conducting research often 
in the same fields but in a haphazard manner. 
17. 9. 84 Official Journal of the European Communities No C 248/35 
The problems of research — standard and effective­
ness — are closely related to certain inadequacies in 
the educational systems of EEC Member States. 
3.6. Demographic problems 
Another problem that deserves to be mentioned is 
the ageing population and demographic problems of 
the Community. In the near future virtually all EEC 
countries will have a negative birth rate. This is a 
serious threat to the dynamism of the Community. 
4. Does Community action measure up to the 
crisis? 
Even if the economic climate is improving in most 
of the Member States, an analysis of the cyclical and 
structural position of the Community's economy 
gives rise to a general feeling of anxiety. 
The various analyses available, and particularly the 
Commission's evaluations, show a clear need to see 
the current expansion of activity go hand in hand 
with a continuing drive to put the economy back on 
a healthier footing. 
The EEC Commission, which was instructed by the 
Stuttgart European Council to take sweeping action 
to revive the Community and to establish a firm 
base for its vigorous development, must rediscover 
its role as the driving force responsible for shaping 
the Community's future. To this end the Member 
States must show it more goodwill. 
Greater efforts at both the planning and the techni­
cal implementation stages are absolutely essential. 
The Commission's relative passiveness in the face of 
a sustained recession is difficult to excuse even if 
account is taken of the Council's specific responsi­
bility in this matter. 
5. The case for a return to joint action on the 
economic front 
In its opinion of 6 July 1983 the Committee took a 
clear stance on several important issues. The Com­
mittee now reiterates these views. It considers at the 
same time that it is a matter of urgency to single out 
one or two major priority areas which are likely to 
receive the support of Europe's decision-making 
bodies. At the moment there is no sign of a growth strategy 
capable on its own of achieving and stabilizing an 
adequate level of employment. Specific employment 
policy, including the reorganization and reduction 
of working time, must therefore figure among these 
priorities. 
Employment policy will be dealt with in detail in the 
Committee opinion on Social Developments in the 
Community. 
5.1. Return to vigorous, lasting growth 
Return to vigorous quantitative and qualitative 
growth would help to solve various key problems, 
particularly unemployment. Unemployment on to­
day's scale is an unacceptable waste of human and 
financial resources and presents, moreover, a real 
threat to democracy. 
If the Community is to preserve its competitiveness 
it cannot continue to shoulder the ever-rising finan­
cial burden of unemployment; nor can it continue to 
accept the hardships and despair facing millions of 
men and women without a job whilst still in their 
prime. 
It is not possible either to ground economic policy 
on standards which are stagnating or even dropping 
continuously. 
The Council should therefore decide to make an 
attempt to draw up a European economic concerta-
tion instrument with the help of the Community's 
main socio-economic operators. In Europe today 
there is a significant convergence of fundamental 
problems and challenges. Unfortunately, however, 
the various Member States have adopted a wide 
range of approaches. A joint strategy on this matter 
would clearly be useful. The Economic and Social 
Committee could act as a forum for discussions 
about such a plan. 
5,2. Reactivating investment 
A big effort, comparable with that of the post-war 
period, will have to be made to swiftly stimulate 
productive investment. Such investment will boost 
consumption in a relatively short period of time as a 
result of the inevitable spread of purchasing power. 
To do this, certain preconditions are necessary: 
No C 248/36 Official Journal of the European Communities 17. 9. 84 
(a) A coherent, purposeful policy to ensure the mo­
bilization of private savings 
Taxation arrangements for savings should be 
harmonized throughout the Ten in order to en­
sure that savers receive real net comparable re­
turns on their savings. Another objective would 
be to ensure that investment in the Member 
States is more profitable after tax than invest­
ment elsewhere and particularly in the United 
States. 
Small and medium-sized firms and craft trades 
do not find it easy to borrow on the capital mar­
ket, so the possibility of their obtaining funds 
from private savings should be examined in a 
pragmatic spirit. 
(b) A review of the system of corporate savings. 
Funds needed by firms by and large stem from 
their own savings. 
Profit levels and tax arrangements must there­
fore leave sufficient resources for self-financing. 
This is all the more important, since the keen 
international competition is making it necessary 
to find more and more venture capital. Although 
a uniform Community taxation system is impos­
sible, the Member States should at least adopt 
sufficient common basic principles to preclude 
any major distortions of competition. 
(c) Community investment projects in the vanguard 
Work to halt the destruction of forests, to clean 
up rivers, waterways, lakes, seas, etc., the Chan­
nel Tunnel project, the bridging of the Straits of 
Messina (projects whose usefulness and viability 
are now beyond question), the construction of a 
rail network for high-speed trains, maritime 
transport, the energy sector, the immense open­
ings offered by telecommunications and a Com­
munity-wide urban renewal campaign could mo­
bilize Community savings without difficulties 
and create a considerable number of new jobs. 
Such investments would be of benefit to the Com­
munity and would also be of political significance 
throughout Europe. 
6. The case for a Community programme to simplify 
procedures 
The net result of adding Community rules on top of 
national rules without the latter being streamlined is 
not to free the entrepreneurial spirit but to make 
freedom of action difficult and sometimes impossi­
bly complicated. The proliferation of rules and regulations obscures 
the Community's fundamental objective, i.e. the 
achievement of an operational internal market. 
Setting up an industry in the Community is an ob­
stacle race because of the many formalities involved. 
This is a striking contrast to the way the process is 
eased in the United States. 
The Council could instruct the Commission to ana­
lyze the obstacles impeding the creation and opera­
tion of firms. It could then make recommendations 
on ways and means of simplifying procedures and 
abolishing superfluous regulations by giving Com­
munity law precedence over national law, in order 
to: 
— free the potential for increased productivity cur­
rently stifled by regulations, 
— reinject greater flexibility into the deployment of 
means of production. 
It is essential to adapt work to man and not vice 
versa. 
7. Competition policy must be adapted 
The Commission must not stand in the way of the 
changes that need to be made in Europe's industries 
and must allow European firms to use the same 
weapons as competitors from other countries. This 
implies substantial flexibility in applying Articles 85 
and 86 of the Treaty of Rome. 
8. Joint research policy must be pursued and devel­
oped further 
At Community level initiatives in support of funda­
mental or pre-market-stage research should be ac­
tively pursued with programmes like ESPRIT. 
Moreover, research workers throughout the Com­
munity should team up in joint ventures. SMEs 
should be given special attention and granted effec­
tive aid (access to NCIs) in order to develop their 
creative potential. 
Firms themselves are, however, in the best position 
to determine how applied research and its offshoots 
17. 9. 84 Official Journal of the European Communities No C 248/37 
can be put to use in the field of production. At this 
stage intervention by the authorities should only 
contribute to the creation of an environment and 
financial conditions which are conducive to re­
search. It must not interfere in the choice of pro­
ducts. 
9. The crucial problem of the international monetary 
disarray must be tackled with courage and lucidity 
The disarray in the international monetary system, 
the erratic fluctuations in the value of the dollar and 
the system of floating exchange rates, all have a 
determining influence on the conduct of Member 
State economic policies and have seriously dis­
rupted world trade. 
The Community, as the world's leading trading 
power should be much more active in the quest for a 
basic solution to the crisis in the international mone­
tary system, in accordance with the pledges made at 
Williamsburg. 
The EMS is both a line of defence and a manifesta­
tion of solidarity. In pracitce, however, its ambitions 
are limited. The role of the EMS therefore needs to 
be strengthened and the task of creating a reserve 
currency, namely the ECU, must be pursued in all 
seriousness. It is also highly desirable that the 
United Kingdom join the EMS. 
The immediate task of the Community, acting in 
conjunction with the United States and Japan, is to 
prevent the Third World from being caught up in 
the stranglehold of its excessive debts. Possible solu­
tions include a curb, then a cut, in interest rates and 
the release of additional liquidity, under the aus­
pices of the IMF, to assist the countries with the 
heaviest debts. 
10. We must not let slip the opportunity of building 
up a viable agricultural sector 
The Committee has expressed its views on European 
agriculture on many occasions. We therefore do not 
intend to add anything new at the present time but 
would merely like to reaffirm that agriculture offers 
a social and economic opportunity for the Commu­
nity. This opportunity must be grasped. Needless to 
say the CAP must tie in with the other components 
of the European venture. 
Done at Brussels, 5 July 1984. 11. The Community's trade policy vis-a-vis the rest 
of the world 
The Community should give thorough consideration 
to a number of fundamental problems. These in­
clude : 
— the need to bridge the technology gap while 
agreeing, in some cases, to temporary Commu­
nity curbs on imports of sensitive products, with­
out partitioning the Community market, 
— the limits to be observed in applying the prin­
ciple of the international division of labour. 
Experience indicates that no sector can be per­
manently ruled out from competition, if account 
is taken of present or future technological pro­
gress, 
— the risks inherent in the Community's complicity 
in unacceptable forms of worker exploitation, at 
variance with ILO standards, through cheap im­
ports from newly industrialized countries. The 
Committee would refer inter alia to the opinion it 
adopted on 3 July 1980(>) on development co­
operation policy and the economic and social 
consequences of the application of certain inter­
national standards governing working condi­
tions. 
One of the key components of the Community trade 
policy should be Commission assistance for Com­
munity firms which have obviously been brought 
before the courts of non-member countries for no 
good reason. 
12. Europe's identity vis-a-vis the rest of the world 
must be reinforced 
The Community must assert itself as a force in its 
own right vis-d-vis the outside world and must not 
hesitate any more to display all the economic and 
political assets at its disposal. 
In conclusion, one of the paradoxes of the Commu­
nity's present position in the international economy 
is that it refuses to play the role or exert the in­
fluence which its power would allow. In the final 
analysis a modest, quite feasible increase in Com­
munity will would be sufficient for a change here. 
(•) OJ No C 230, 8. 9. 1980. 
The Chairman 
of the 
Economic and Social Committee 
Francis CEYRAC 
No C 248/38 Official Journal of the European Communities 17. 9. 84 
APPENDIX 
to the opinion of the Economic and Social Committee 
Rejected amendment 
The following amendment, drawn up on the basis of the Section opinion and tabled in accord­
ance with the Rules of Procedure, was rejected by the Committee during the discussions: 
Page 10, first paragraph: 
To read as follows: 
'Greater efforts at both the planning and proposal stages are absolutely essential. However, these 
efforts will be to no avail if the Council fails to act.' 
Reasons 
It is the Council's failure to take decisions — and not the Commission's failure to submit propo­
sals — which is the reason for the passiveness. 
Voting 
For: 12, Against: large majority. Abstentions: 10.