Editor's note

The present multi-sided crisis has revealed national economy sectors that showed alarming decline in the Baltics – financial services and construction, among others.

At the same time, the crisis has shown the worst, i.e. the perverted structure of national economy in the three Baltic States (foremost in Latvia) in which the dominating sector is consumption with a small share of commodities’ export and manufacturing. Generally, these sectors are most vibrant to any kind of unexpected turmoil. Businesses are scaling back or simply holding off from making decisions. The fear is that consumers in this unstable situation will hold off, and with the budget’s heavy reliance on turnover the next year is going to be even more difficult.  Shrinking jobs, redundancies and lack of credits seriously affected business both in the Baltic States and in the rest of Europe.

The EU efforts in 2008

In 2008 two EU Presidencies, Slovenia and France, tried to approach and resolve the threatening crisis; the latter with more avail than the former. Thus based on a French initiative, the December summit tried to eliminate the worst sides of the crises for the EU member states.       

In order to resolve the situation, the EU countries reached an agreement on economic stimulus package to ease the effects of the financial crisis. The package of measures is worth about €200bn, or 1.5% of total EU output. However, the bulk of the money – €170 bln – will come from national budgets; the remaining €30 bln is to come from the EU funds and the European Investment Bank. Governments are supposed to spend the money in the way best suited to their economic needs.

In another troubled area, the Lisbon Reform Treaty’s issue, the decision was not easy either. Many people in Ireland are still worried about how the treaty will affect the country’s taxation policies, its military neutrality and ethical issues such as abortion. The EU officials offered Ireland at December’s summit legal guarantees that the Lisbon Treaty will not infringe on the national issues in those areas. The Council agreed to take the necessary legal steps, so that if the treaty takes effect, all 27 EU countries could continue to have a commissioner in Brussels.

Time to look on the bright side

The truth is that both governments and business have had several instruments at hand to escape from the crisis’ dark shadows. The former (the government) should have taken adequate –sometimes quite painful but necessary – steps towards optimal structural changes (in line with the globalisation threats), the latter (undertakings) – should have elaborated better means to be prepared for any downturns. So, strategic paths are clear and visible.  

Some say that 2009 will be a difficult year; in this case, who shall we rely upon?

Czech and Sweden’s Presidency in the EU Council during the first and the second half-year terms in 2009 will definitely try to soften the effect of existing economic and financial crisis. First comes the Czech Presidency (the second among former “socialist block” countries after Slovenia in the first half of 2008) with the presidency’s motto “Europe without barriers”, see the internet site: www.eu2009.cz.

The main priorities of the Czech government for the member states are: economy, energy and “Europe in the world”. It seems very optimistic and implementation will depend on the government’s ability to tackle urgent issues.

The Swedish Presidency’s role is much more complicated: after new EP’s election in June 2009 the new European Commission is to take shape at the end of the year. So, some exciting moments are really ahead of us. Stay focussed!  

The BC’s international office wishes our readers a merry Christmas and a happy New Year!