Tuesday

15th Jun 2021

EU leaders: growth 'cannot be summoned' at will

  • 'Growth and jobs are not things governments can buy or summon,' says Van Rompuy (Photo: consilium.europa.eu)

EU leaders meeting in Brussels on Thursday (14 March) agreed to a more growth-friendly interpretation of deficit rules, but Germany and others insisted that austerity measures will work if given more time.

The softened wording - coming three years into the economic crisis, and amid rising unemployment and deepening recession in the eurozone - is being seen as a victory for France and Italy.

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Speaking after the meeting, French President Francois Hollande indicated that member states were going to be give more leeway to pursue investment in growth policies.

"We are meeting our commitments, but in a way that does not contradict our objective of growth," he said.

"The guidance we were given today allows us to approach this discussion with confidence," he added.

The summit conclusions note that existing "possibilities" within the rules governing the euro to balance public investment with fiscal discipline "can be exploited."

Paris and Rome have been the most vocal about the need to balance austerity with growth and solidarity measures.

But while the wording represents an acknowledgement that budget-cutting should not be the EU's sole focus, austerity is to remain the cornerstone of the approach to the crisis.

For his part, European Commission president Jose Manuel Barroso noted before the summit that more time is needed to for the benefits of austerity measures to be felt.

German Chancellor Angela Merkel struck the same note.

"It is clear that we are in an interim phase," she said.

Referring to data presented by the European Commission during the meeting on competitiveness, Merkel noted that while it showed some "progress" had been made, it also showed that more "time and determination" is needed.

When asked about the recent Italian election, where the majority of voters cast their ballots for anti-austerity parties, Merkel said that former Italian leader Mario Monti, who introduced a swathe of cuts, had too short a time in office for the changes to have a positive effect.

But she struck a conciliatory note by saying that Thursday's discussions made clear that "budget consolidation, structural reforms and growth are not in contradiction but are mutually reinforcing."

Meanwhile, the summit did not agree any new employment-boosting measures.

According to Hollande, leaders said they would implement a "growth pact" - agreed last summer and seen by critics as a sticking plaster remedy - at an "accelerated pace."

The growth pact is funded by extra money (€60bn) from the European Investment Bank, as well as unused money from EU structural funds, although Merkel admitted it still had to be "filled with life."

A separate €6 billion youth employment scheme is a drop in the ocean at a time when youth employment levels in Greece and Spain are over 50 percent.

"Growth and jobs are not things governments can buy or summon. It is our overriding objective, a result, for which we have to keep striving," said EU council President Herman Van Rompuy.

Analysis

The EU needs to speak the public's language, not austerity-speak

Together with a long-standing attachment to politics by summit, the EU is fond of acronyms. How else can you describe a world inhabited by QMV, Coreper and co-decision, not to mention trialogues, comitology and the Luxembourg compromise?

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