Brussels, 14/05/2012 (Agence Europe) - German Finance Minister Wolfgang Schäuble set out his vision of an EU growth stimulus initiative on Tuesday, as the new French president, François Hollande, met the German chancellor, Angela Merkel, in Berlin. In an article published on Monday 14 May in French business newspaper Les Echos, Schauble said growth is never at odds with spending cuts and an intelligent budget creates the confidence without which consumption and investment are inconceivable. He said growth could help reduce state spending and increase state revenue. He said eurozone nations had to work unceasingly at convergence of their national economies and praised the efforts of Spain and Italy. He said that an EU growth stimulus initiative requiring increased EIB resources, better targeting of structural funds and a debate on the EU budget would be “legitimate”.
On Friday, German Foreign Minister Guido Westerwelle gave an overview of how he sees an EU growth initiative from Germany's viewpoint, which would make use of €80 billion in unspent funding from the structural funds and better monitoring of how investment cash is actually used. In order to encourage the deployment of large-scale cross-border infrastructure, public-private partnerships should become the norm. Measures are needed to stop the credit crunch for small business in this period of bank deleveraging and an EU risk capital market might be a good idea. As far as Germany is concerned, the full potential of the single market is not being used and opportunities are available in the e-commerce and energy sectors, for example. Europe should sign free trade agreements with countries in Asia and the Americas because there has been little progress on trade deals at the WTO.
The meeting between Hollande and Merkel, whose Christian Democrat party was defeated in the regional elections at the weekend, is giving rise to great hopes among European Social Democrats. The head of the S&D Group at the EP, Hannes Swoboda, says there is an urgent need for a new direction in Europe based on action for growth and investment. He backs Italy's call for certain public investment to be excluded from the Stability and Growth Pact rules, such as investment in IT. Swoboda said that, as Monti had rightly said, there has to be a distinction made between different types of costs under the Stability and Growth Pact. Public investment should be treated differently from other expenditure and should not be included in the calculations for structural deficits.
At the end of last week, after a meeting with Danish Prime Minister Helle Thorning-Schmidt, European Council President Herman Van Rompuy set out four main conditions for boosting growth, namely “to keep up with structural reforms and smart fiscal consolidation”; “making greater use of the full potential of European policies in favour of growth in the Single Market” such as the energy efficiency directive (see EUROPE 10613); increasing the capital of the EIB (a €10 billion increase would make it possible to increase lending by €60 billion over three years and create a leverage effect of €180 billion); changing the priorities of the 2014-2020 Financial Framework. (MB/transl.fl)