Brussels doubles emergency funding to EU economies

BRUSSELS - The European Commission has unveiled a draft version of its plan for the economic recovery of the European Union, a plan that includes an even more generous boost to the emergency fund for EU economies battered by the global financial crisis than had previously been proposed by French President Nicolas Sarkozy.

"Europe must confront the economic downturn with the same robust and coordinated approach we have taken on the financial crisis," commission President Jose Manuel Barroso said on Wednesday (29 October), after an extraordinary college meeting devoted to the ongoing market mayhem.

As part of the commission's plan - to be published at full length on 26 November - Brussels is proposing to more than double the existing financial facility used to provide loans to EU countries facing difficulties.

The fund's ceiling currently stands at €12 billion. The commission is now suggesting it should be topped up to €25 billion. On Tuesday night, French President Nicolas Sarkozy, whose country holds the EU's six-month rotating presidency until the end of December, had proposed a limit of €20 billion.

Budapest is so far the only EU capital that has recently put in a request for some of the bloc's emergency lending, but EU economy commissioner Joaquin Almunia has indicated that more countries could follow suit.

"We know some other members of the EU are under stress in the financial markets and we are ready to act," he said.

Other measures

Other measures proposed by the commission for Europe's economic recovery mainly include the deployment of existing instruments within the bloc's budget.

"We must keep unemployment to the absolute minimum and support those who have lost their jobs. We will review how we can reinforce the effectiveness of the globalisation adjustment fund," said Mr Barroso.

He referred to the fund, worth €3.5 billion between 2007 and 2013, that is designed to help workers whose employers have moved to other states outside Europe in search of cheaper labour and production costs. But so far, the fund has not been used to an enormous extent by the bloc's member states.

The commission is also promoting a link between the current financial needs to boosting public investments and the EU's green agenda.

"Investment in energy efficiency in buildings can provide the opportunities for the construction sector while contributing to tackle climate change. We also need to look at other areas of green technology - for example cleaner cars," insisted Mr Barroso.

But the European Socialist Party quickly responded with criticism of the commission's "unambitious recovery plan" suggesting "It is far too little for the scale of the crisis we are facing."

"Events - including national government actions - are moving faster than the European Commission. It needs to act now if it is going to co-ordinate, and create synergy between, national government recovery plans," said the party's president, Poul Nyrup Rasmussen.

Construction, automobile and textile industries are expected to be hit the hardest by the global credit crunch that first broke out last summer in the US and which is due to lead to the loss of 20 million jobs worldwide, according to the International Labour Organisation.