SIGNS OF
RECESSION IN WEST EUROPEAN ECONOMY
By Henri Valin
For the first time since the beginning of the big postwar economic boom in Western Europe, a majority of the capitalist countries there clearly show signs that the many years of nearly uninterrupted economic growth are coming to an end and that many of them now face an economic recession. True, several of them ~- especially Britain, Belgium and Sweden -- have undergone recessions since 1945, particularly in relation with the regular recessions of the U.S. economy. But up until recently the biggest countries on the continent escaped these recessions. The biggest of all, West Germany, has not experienced a single year of downturn in industrial production since 1948.
The first indications that this long summer -- falsely attributed by some observers to the creation of the European Common Market -- was over, came with a recession in France in 1964.and one in Italy in 1964. Both recessions appeared to have been engineered by the government; i.e., they were precipitated by stringent credit restrictions put into effect by the central bank and government authorities. In reality, the restric-— tions were a response to indicators signaling even sharper recessions if the governments had not reacted as they did.
A more ominous indication was the failure of the French and Italian economies to restore full employment after the recovery. A recent survey in the Paris daily Le Monde shows that unemployment in France now stands at its highest since 1945 although industrial production is again booming. :
But what has affected the West European capitalist economy more than anything else is a turn in the economic tide in West Germany. The boom came to a halt in 1966 and there are many signs indicating that the country is on the verge of a recession.
Demand for additional workers and white-collar employees in business has declined sharply from more than 500,000 at the beginning of 1966 to less than 300,000 at the end of November. The number of unemployed rose from a few tens of thousands as the year opened to almost 300,000 currently. Thousands of workers have been laid off due to the closing of coal mines and steel plants -- the two basic industries most strongly affected by the crisis. The auto industry also seems to be in trouble. The "Big Three" (Volkswagen, Daimler-Benz and Opel) have put hundreds of thousands of workers on part time for December and January; and some of them have even decided to close down entirely for several weeks in view of the backlog of unsold cars.
The West German recession has had a sharp impact on neighboring countries like Belgium and Holland, which are dependent on the West German market for a considerable part of their exports. In these countries unemployment figures have risen steeply. The worst hit is the tiny country of Luxemburg which is completely specialized to produce steel. ,
Finally Britain is in the throes of the recession engineered by Prime Minister Wilson mainly for the purpose of creating a pool of unemployed large enough to act as a depressant on the unions and the more nilitant sectors of the working class, thereby making it easier to "rationalize" and modernize the British economy at the expense of the workers.
; The coinciding of recessions in the two main capitalist countries of Western Europe -- West Germany and Britain ~~ could have touched off a major recession throughout the capitalist world economy were it not for a single preventive factor: the still rising military expenditures for the U.S. imperialist war of aggression against the people of Vietnam and the resulting situation of nearly full employment in the United tates. :
This induces a rise in exports from Japan and many semicolonial countries to the U.S., enabling these countries in turn to increase their imports of industrial and transport equipment from Western Europe, especially West Germany. The effects of the reces-~ sion in Western Europe are cushioned in this way. Another mitigating factor is the constant, although as yet modest, rise in the export of goods and capital to the East European workers states. (The big West German, Italian and French automobile companies have started to build plants in many of these countries; Krupp is doing the same; and the British capitalists are busy assisting the USSR to build a new chemical industry.)
As one official in the European Common Market put it rather cynically, the outlook is not somber, provided there are no cutbacks in American military expenditures...
UNEMPLOYMENT IN