Brussels, 25/11/2008 (Agence Europe) - In launching an economic recovery plan for growth and jobs, the European Commission proposes to act alongside member states in supporting the EU economy. In a communication, to be adopted on Wednesday 26 November, the Commission sets out the Community instruments that it plans to set into motion and reviews the many national actions that can be envisaged. This approach in the form of an inventory aims to coordinate and guide intervention by member states, depending on their own situation and measures already announced. The aim is above all to avoid a deep recession and to restore consumer and business confidence, the draft text obtained by EUROPE states. The recovery plan, to be discussed by the European Council on 11 and 12 December, includes a vast range of initiatives (more or less new) that respond as a priority to the objectives of the Lisbon Strategy and to the rules of the Stability and Growth Pact (SGP).
Monetary and credit conditions. The European Investment Bank (EIB) will increase its yearly interventions in the EU by some €15 billion for the next two years, and the European Bank for Reconstruction and Development (EBRD) by €500 million annually its level of financing in the new member states. The Commission notes that, for the European Central Bank (ECB), there is emerging evidence of scope for further reductions in interest rates.
SGP flexibility. The budgetary stimulus (the magnitude of which has still to be defined), which is intended to counter the expected fall in demand, should be timely, targeted and temporary, and be implemented immediately. This budgetary stimulus (by member states) can only be envisaged for a two-year period at most (2009-2010), after which the EU27 should commit to reverse the budgetary deterioration and return to the aims set out in the medium term objectives. Tax reductions or additional short term spending can therefore be envisaged, whether these be temporary indirect tax reductions, the granting of guarantees and loan subsidies to compensate for the unusually high current risk premium, or lower taxes on labour, particularly when targeted on low-wage earners, the Commission states. In applying such measures, some member states may be obliged to break the 3% reference value in 2009 and 2010, the Commission says, giving its assurance that the SGP will be “applied judiciously” (EUROPE 9772), and specifying that excessive deficits will have to be corrected in time frames consistent with the recovery of the economy.
Four priority areas of the Lisbon Strategy. A combination of EU policies and funds can act as a catalyst for budgetary stimulus, improve conditions for future investments, reduce administrative burdens and speed up innovation. In regional matters (see below) such as social issues (for the European Social Fund and the European Globalisation Adjustment Fund), it is above all a matter of bringing certain payments forward and increasing the amounts. Other useful elements for addressing the crisis in the short term are also taken from the Lisbon Strategy, concerning access to financing for SMEs (the EIB has already increased the loan amounts available) and infrastructure and energy (funds not spent will be attributed to energy interconnection projects and broad band networks, urgent measures for improving the energy efficiency of buildings will be launched, and the Commission will suggest reduced VAT rates on “green” products and services). On the subject of research and innovation, emphasis must be placed on the development of clean technologies. The Commission thus suggests launching three kinds of public-private partnership in key sectors: automobile, construction and manufacturing. To these actions must be added Community support under cohesion policy, and the European Commission must, moreover, adopt a proposal for amending Regulation 1083/2006 n the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.
Structural Funds. The aim is to speed up implementation of programmes by increasing the advances made to beneficiaries within the 2007-2013 programmes already approved. Danuta Hübner, Commissioner for Regional Policy, thus suggests that additional liquidities should be made available to the public authorities at all regional levels. The amount of additional advance payments foreseen in 2009 by the proposal is €6.3 billion in payment appropriations. These additional resources would be made available early 2009. We recall that the total budget for the programmes under Cohesion Policy amounts to €347 billion for the period 2007-2013. In practical terms, the proposal provides for a rise in the third pre-financing section (2009) of 2% (for all funds) in favour of the 12 countries that joined the EU on 1 May 2004 and, later, the creation of a third tranche of 2.5% (for all funds) to the benefit of the 15 former EU member states. Also when it comes to the aim of European regional cooperation, if the programme comprises at least one of the new EU member states, it will be granted a further 2.5% in 2009. The proposal also allows enlargement of the scope of Article 44 (instruments under financial engineering) to allow the European Investment Bank to help member states in the work of preparing and implementing operational programmes (A.B./L.C./transl.jl)