Brussels, 15/03/2013 (Agence Europe) - The European Spring Summit on 14 and 15 March 2013 did not turn into a clash between supporters and opponents of austerity in this period of economic crisis. All leaders agreed that budget rules must be respected, pointing out that there was room for manœuvre for boosting growth and tackling unemployment, particularly youth unemployment, which is now at alarming high.
President of the European Council Herman Van Rompuy said there was not miracle solution and he was fully aware of the distress of growing numbers of Europeans. He said the right balance had to be struck between budget consolidation and financial stability and dealing immediately with the negative social impact of the crisis with structural reforms and targeted measures to stimulate growth.
On the budget front, the Stability and Growth Pact must be respected, with the priority going to respect for structural efforts (in other words, not including the impact of the crisis). The French president, Francois Hollande, said that talking about structural efforts was not the same as nominal efforts. Sustained structural effort will be rewarded, he said. Sticking firmly to its trajectory for getting its budget into balance by 2017, France will be given an extra year, until 2015, for getting its budget deficit below the 3% cut-off point. Portugal is stuck in acute recession, but is applying its structural adjustment programme agreed with the troika to the letter (imposed as a condition for a financial aid package) and on Friday, it was officially given one more year to reduce its public deficit (see separate article).
The prime minister of Luxembourg, Jean-Claude Juncker, said a close eye would have to be kept on the effect of spending cuts on economic growth. He said that continuing to clean up public finance was a matter of credibility and coherence because highly indebted countries have the lowest growth. Spanish Prime Minister Mariano Rajoy warned, however, of the risk of seeing Europe move further away from growth and citizens moving further away from Europe.
Should budget consolidation be adjusted in line with the needs of each country? Are too many concessions being made to struggling countries? German chancellor Angela Merkel said that wasn't her impression as the EU is well aware of how dangerous deficits are.
Room for manoeuvre. In their conclusions document, the leaders stress that there is room for manœuvre in the budget so that public investment in countries not subject to excess deficit proceedings can be calculated differently, a matter dear to Italy, which has published a special report on the matter. Outgoing Italian Prime Minister Mario Monti (this is his last summit) said that this would make it possible for certain countries to have targeted action to boost the economy along with a credible public finance correction programme. Monti said the countries would be able to make better use of their co-financing quota for EU structural funds to release state investment in areas listed as priority regions by the EU. For Italy, this would translate into tax relief for permanent part-time jobs and apprenticeships. Merkel said the Italian view was “eminently pertinent” ahead of a European Commission report expected in the summer.
Is Germany doing enough to boost growth in the eurozone? Hollande said it had great responsibility and could not rely on the strength of its exports, but should boost domestic spending, which has begun to increase, said Juncker. Hollande said countries in surplus should retain their advantage and boost domestic demand in order to boost growth in the eurozone.
EMU. In June, Europe's leaders will issue a roadmap on economic and monetary union (EMU) and discuss progress in introducing the Growth Pact (progress that the president of the European Commision, José Manuel Durao Barroso, said was too slow). Speaking of the debate at the eurozone summit on Thursday, Van Rompuy said consultations were being held with the member states and European Parliament on competitiveness contracts that member states will be asked to sign with the European Commission to reform the economy in return, possibly, for temporary financial aid.
When it comes to Banking Union, the European Summit wants final political agreement to be reached over the next few weeks on the creation of a eurozone bank supervision body under the aegis of the ECB. Draft legislation to set up an EU bank resolution authority will be unveiled in the summer so that it can be adopted before the European elections in May 2014. (MB with AN/CG/FG/LC/transl.fl)