WHICH LED TO A DOUBLING OF THE RATE OF UNEMPLOYMENT .
THE IMPACT ON THE PRICE LEVEL IS VERY SIGNIFICANT , ESPECIALLY WHEN THE INCREASE IN ALL ENERGY PRICES IS TAKEN INTO ACCOUNT : AN INCREASE IN CONSUMER PRICES OF 2 TO 2.5 % IS THE AVERAGE EFFECT IN THE COMMUNITY , WITHOUT , HOWEVER , MAKING ANY ALLOWANCE FOR SECONDARY INFLATION EFFECTS ( THROUGH THE PRICE-WAGE SPIRAL ) WHICH HAVE TO BE LIMITED TO THE MINIMUM . THE PRICE EFFECTS WILL BE WORKING THEIR WAY THROUGH MAINLY IN THE SECOND HALF OF 1979 . UNAVOIDABLY THE YEAR-ON-YEAR RATE OF INFLATION IS INCREASED IN 1979 AND 1980 TO ABOUT 9 % , COMPARED TO THE LOW POINT OF JUST UNDER 7 % ACHIEVED IN 1978 . THE OBJECTIVE SHOULD LIMIT THE TEMPORARY RISE IN THE AVERAGE INFLATION RATE TO NO MORE THAN 2 % AND TO RE-ESTABLISH A DECELERATING TREND IN THE COURSE OF 1980 . THE COMMUNITY HAS A SPECIAL INTEREST IN SEEING A RAPID REVERSAL OF THE RECENT TENDENCY FOR INFLATION RATES TO BEGIN AGAIN TO DIVERGE .
THE CURRENT ACCOUNT OF THE BALANCE OF PAYMENTS OF THE COMMUNITY IS AT PRESENT DETERIORATING , AND THE OUTCOME FOR 1979 AND 1980 IS LIKELY TO BE DEFICITS OF THE ORDER OF 3.25 TO 5.25 BILLION EUA , BY COMPARISON WITH THE SUBSTANTIAL SURPLUS OF 14 BILLION EUA RECORDED IN 1978 . THIS MOVEMENT REFLECTS THE INFLUENCE OF BOTH THE CHANGING RELATIVE CYCLICAL POSITION OF THE EUROPEAN AND UNITED STATES ECONOMIES AND THE INCREASED PRICE OF OIL ( WHICH INCREASES THE COMMUNITY ' S OIL BILL BY SOME 20 BILLION EUA ). THE CURRENT ACCOUNT OF MEMBER STATES COULD WELL CONTINUE TO DETERIORATE UNTIL THE END OF 1979 , BUT A SPONTANEOUS RECOVERY SHOULD BECOME APPARENT IN THE COURSE OF 1980 AS OPEC IMPORTS INCREASE AND RELATIVE CYCLICAL TRENDS BECOME LESS DIVERGENT . THE BALANCE OF PAYMENTS DETERIORATION HAS FOR THE TIME BEING TO BE ACCEPTED , SUBJECT TO THE SPECIAL POSITION OF CERTAIN MEMBER STATES , AND TO RECOGNITION OF THE OVERRIDING PRIORITY TO STRENGTHEN ENERGY POLICY SO AS TO REDUCE DEPENDENCE ON IMPORTED OIL .
THE COMMUNITY IS FACED WITH TWO SETS OF DIFFICULT STRUCTURAL ECONOMIC PROBLEMS . THE FIRST IS THE COMPLEX OF ISSUED LINKING PRODUCTIVITY TRENDS , EMPLOYMENT POLICY AND INDUSTRIAL POLICY . THE SECOND CONCERNS ENERGY . TOGETHER THE HANDLING OF THESE ISSUES WILL BE QUITE AS FUNDAMENTAL TO FUTURE PERFORMANCE OF THE COMMUNITY ECONOMY IN TERMS OF PRICE STABILITY AND GROWTH AS ISSUES OF SHORT-TERM ECONOMIC STRATEGY .
A NUMBER OF FACTORS SUGGEST THAT PAST LONG-RUN PRODUCTIVITY TRENDS , FOR EXAMPLE THE 4.3 % ANNUAL AVERAGE EXPERIENCED IN THE COMMUNITY IN 1960 TO 1973 , WILL NOT BE RESTORED IN THE FORESEEABLE FUTURE . WHILE ON BALANCE AVERAGE PRODUCTIVITY GROWTH IS LIKELY TO BE LOWER , THE CONTRIBUTING FACTORS ARE NOT HELPFUL TO EMPLOYMENT . THE QUANTITY OF WORK AVAILABLE IS IN NO WAY FIXED AND INCREASING PRODUCTIVITY IS REQUIRED TO DAMPEN THE RISE