Brussels, 22/10/2014 (Agence Europe) - In the morning of Friday 24 October, the 28 European leaders will meet, followed by a session in Eurozone format over lunch, to take stock of Europe's response to an economic situation which has grown no less moribund.
Under pressure from the Social Democrat family, which is to meet in Paris from Thursday , the European Council is expected to note that the worsened economic situation has not improved since the end of August, particularly within the Eurozone (EUROPE 11144). In proof of this, the ECB in September announced new exceptional measures to fight excessively low levels of inflation (0.3% in September, its lowest level since September 2009) and ultimately to breathe new life into the economy. It will most likely take note of the scale of the challenges to be faced - flat-line growth, high unemployment, insufficient levels of public and private investment, ongoing macroeconomic imbalance, high public debt and lack of competitiveness - with a new legislative cycle about to get underway.
Emphasis will be laid on what the future European Commission led by Jean-Claude Juncker can do to boost investment, whilst a specific Franco-German initiative has been launched and an EIB/Commission 'task force' has identified promising investment projects (EUROPE 11180). At the European Parliament on Wednesday, Juncker announced that the investment plan promised in July would be presented before Christmas. This plan, which has been put at €300 billion, will aim to mobilise as much private money as possible, but without creating any additional debt. Several ideas have been put forward, such as using the EU budget to incentivise the EIB to take more risks in areas in which it has been underactive (such as youth employment).
Speaking before the Italian Senators on Wednesday 22 October, the Italian Prime Minister, Matteo Renzi, urged the EU to take advantage of the institutional transitional period to move away from austerity and focus on growth and investment. Otherwise, the Eurozone will remain the “Cinderella” of world growth, he stressed.
The anchor of stability. With the outgoing Commission currently analysing the draft budgets for 2015 of the Eurozone countries, the Eurozone Summit is expected to go no further than to reiterate that the Stability and Growth Pact, as the 'anchor of stability', will not be amended, but that the flexibility contained within it will make it possible to take account of the economic situation and bring structural effort into line with specific national features. It is highly likely that emphasis will be laid once again on the importance of consolidating public finances in such a way as to avoid stifling growth and to continue to invest in the future, as well as on the need to continue structural reforms designed to stimulate economic competitiveness.
At the Eurozone Summit, the President of the Eurogroup, Jeroen Dijsselbloem, will repeat his proposal to build in a greater link between structural reforms and the assessment of budgetary effort and investment policies (EUROPE 11176). Additionally, the Eighteen may also go as far as to discuss areas for work with a view to the assessment of the rules ('2-pack' and '6-pack' packages) reinforcing the budgetary and macroeconomic supervision of the Pact and which will be presented at the end of this year, in a stage which will pave the way for legislative revision.
On Wednesday, the Commission asked Austria, France, Italy, Malta and Slovenia for additional information about their draft budgets for 2015. A source within the European institution stressed that this was not an indication of a possible unfavourable opinion. (MB)