EU ministers and officials were upbeat ahead of a final round of talks on the 'fiscal compact', the treaty that aims to tighten eurozone budgetary discipline, which they want to sign off at a summit, on 30 January. The summit, ostensibly about boosting growth and jobs, will likely be overtaken by the treaty sign-off and what one official described as “the elephant in the room”: Greece.

"Anti-recession summit"

European Council President Herman Van Rompuy has billed the meeting as an “anti-recession” summit, and a statement due to be rubber-stamped by the 27 EU leaders makes very clear that austerity-only policies will not work. “We must do more to counter the risk of recession,” the latest draft of the text says. “Growth and employment will only resume if we pursue a consistent and broad-based approach, combining a smart fiscal consolidation preserving investment in future growth, sound macroeconomic policies and an active employment strategy,” they say, adding that there are “no quick fixes”. “The drastic measures required to overcome the crisis are painful,” they say.

The grim assessment comes just days after the International Monetary Fund slashed its forecast for the eurozone economy, predicting it will actually shrink by 0.5% this year instead of grow. The European Commission has also signalled it will lower its forecasts, with Economic Affairs Commissioner Olli Rehn recently predicting a “moderate recession” in the first half of the year.

The leaders’ statement focuses on three areas: stimulating employment, particularly for the young, completing the single market and boosting company financing, particularly for small and medium businesses (SMEs). Their suggestions include:

- countries to submit “national jobs plans” with their budget outlines each year under the 'European semester'

- cutting taxes on workers

- increase traineeship and internship programmes

- sending more people abroad for work

- liberalising closed professions

- rapid adoption of draft or new legislation, including on energy efficiency, accounting, public procurement, e-commerce, roaming and the EU patent

- “pragmatic coordination” of tax policies

- using unspent EU budget money to leverage SME loans via the European Investment Bank

- introducing new rules on venture capital and project bonds to fund public private partnerships.

Leaders have said they will come back to the issues when they meet again in March.

Fiscal compact

Meanwhile, officials and ministers are buoyant about an accord on a new treaty for fiscal discipline, which will force countries to write spending brakes into national law. A contentious clause (Article 8) allowing the EU Court of Justice to sanction countries that fail to do so is still causing trouble. The European Central Bank is also insistent that Article 3, which lays down the debt rule, does not allow countries too many opt-outs during “emergencies”. There are also differences over Article 7, which introduces a new voting system for accepting Commission recommendations on deficit levels - Italy in particular wants more room for manoeuvre for high-debt countries, while the Netherlands and other countries want to introduce reverse majority voting - where countries have to gain a qualified majority in order to oppose a proposal - on Commission proposals to place a country in the excessive deficit procedure (which brings added scrutiny of national spending) based on high-debt levels.

The final round of talks on the treaty began as Europoliticswent to press, with a new version - the fifth so far - of the draft treaty expected to be circulated over the weekend. MEPs in Parliament’s Socialist group voiced doubts about the necessity of a new treaty, with group leader Hannes Swoboda saying it could end up being an “irrelevance and distraction from the real problems facing the EU”. However, Irish Europe Minister Lucinda Creighton said the draft was “of very symbolic importance” to reassure the ECB, IMF and creditor countries, such as Germany, that the eurozone is serious about fiscal responsibility.

The draft summit statement is available at www.europolitics.info > Search = 307877