The ETUC report explains that the surprising upturn beginning in 2006 is not so much the result of ‘stability-oriented’ policies but of ‘growth-supporting’ aggregate demand policies.
  The trade union analysis also finds that structural unemployment in the euro area has fallen and is now below 8%. This provides policy-makers with the opportunity to trigger a cycle of high, domestic demand-led growth, similar to the one experienced over the 1997-2000 period.
  A return to annual growth rates of between 2.5-3% is possible, provided macro-economic policy-makers continue to support growth with expansionary demand policy instead of withdrawing demand from the economy.
  To this end, the ETUC urges the European Central Bank (ECB) to stop hiking interest rates and to prepare for a possible fall of the dollar by drawing up a regime for a growth-friendly exchange rate policy. Finance ministers need to adjust the pace of fiscal consolidation, taking the economic situation and the investment needs of a modern labour market into account.

Says ETUC General Secretary John Monks: “The 2006 upturn proves that the euro area economy is constrained from the demand side and not from the supply side. What macro-economic policy-makers need to do right now is not to withdraw demand from the recovery but to get the economy back into a cycle of high growth similar to the one the euro area had over the second half of the nineties.”

Annex: ETUC report: Turning the upturn into a cycle of strong and continuing growth