Europan Council/Growth pact
Leaders agree 120 bn euro growth fund
By Sarah Collins | Friday 29 June 2012
EU leaders have agreed on a ‘compact for growth and jobs’ that they hope can leverage up to €120 billion via the European Investment Bank to plough into needy economies. The plan, signed at a summit on 29 June, provides for a €10 billion capital boost for the European Investment Bank, which it says it can use to attract private capital of up to €60 billion. The capital boost comes alongside a €4.5 billion EIB project bonds initiative and a deal to use unspent Structural Funds of around €55 billion to part-guarantee EU loans.
The plan was finally agreed, on 29 June, after being held hostage the evening before during fractious talks on measures to rescue Spain and Italy from bond market pressure. Italian Premier Mario Monti refused to sign up to the pact unless leaders agreed to let Italy tap a special bond markets programme in the eurozone’s rescue fund, a measure he was eventually granted (see separate article).
EU leaders were short on comments on the plan, which has been lambasted by left-leaning MEPs as falling way short of the mark. “While we urgently need to move beyond the narrow austerity focus, the ‘growth compact’ lacks any credibility,” said Greens-EFA Co-President Rebecca Harms (Germany). “The overall amount is a drop in the ocean. Worse, it is reliant on the recycling of existing funds and fairytale assumptions on leveraging, with no social or environmental conditionality.”
The growth compact also asks member states to recommit to EU targets under the ‘Europe 2020’ strategy (on jobs, education, climate and anti-poverty) and the Stability and Growth Pact (EU debt and deficit targets), as well as asking them to tackle unemployment and reform their public sectors. On the EU side, they should deepen the single market, reduce regulatory burdens for businesses, finish the internal energy market and boost research. There are references to the EU patent, cohesion policy, the EU budget, tax policy, boosting employment, trade and financial stability.
The compact was pushed by French President Francois Hollande, who insisted it be inked before he signed up to a German-led ‘fiscal compact treaty’. Hollande on 29 June, linked ratification of the fiscal pact in France with a financial transaction tax (FTT), which is currently being discussed among several eurozone member states, which want to take the proposal forward under enhanced cooperation (see separate article).
The pact was agreed as part of a short-term boost for the EU economy, while eurozone leaders have begun work on a ten-year plan to stabilise and further integrate the 17 single currency countries. That report, on a “genuine economic and monetary union” - written by the presidents of the European Commission, Central Bank, Council and Eurogroup - will be fleshed out with a timetable by December.
The summit conclusions are available at
www.europolitics.info > Search = 317563