Leaders to set targets to help European economic recovery

PLAN FOR GROWTH:EUROPEAN LEADERS have taken their first steps towards the development of a new medium-term economic plan for the EU, resolving to adopt a limited number of targets in their effort to give impetus to the union's economic recovery.

After a summit that was overshadowed by the decision of EU leaders to pledge support for Greece to avoid a sovereign default, Taoiseach Brian Cowen said there was “much negotiation” to be done before the specific policies to be targeted would be agreed by European leaders.

At issue in the negotiations in the months ahead is the extent to which EU leaders agree to co-ordinate their efforts under supervision systems akin to those in the stability and growth pact.

European Council president Herman Van Rompuy said after the summit that there was no discussion on the possibility of imposing sanctions against countries that fall short of their targets.

While Mr Rompuy suggested before the summit that the programme could include financial incentives to encourage countries to reach their targets, Mr Cowen said this was not discussed.

Drawing from a presentation to the summit by European Commission president José Manuel Barroso, Mr Cowen made a stark assessment of the challenges ahead for the European economy.

“The crisis has wiped out much of the progress that we’ve seen in the past. Industrial production in Europe is down 20 per cent since the crisis, back to the 1990s, and there’s minus 4 per cent growth in 2009, which is the worst since the 1930s,” he said.

“In terms of unemployment levels, there’s 23 million people unemployed. If you like, that’s more than the entire population of Romania. There’s seven million more unemployed in the last 20 months. It’s expected to reach 10.3 per cent in 2010, back to 1990s levels, and youth unemployment is twice that rate.

“So Europe’s growth has been clearly hit. The basic point that’s been made is that Europe has to react to avoid that level of decline, that the room for manoeuvre is constrained and we have to learn the lessons in terms of the future.”

Mr Cowen said the priority areas could include competitiveness; research, science and innovation; the completion of the EU internal market; employment activation and training; and the development of low-carbon technology.

Agriculture was another possibility. “I mention agriculture and food not just from an Irish perspective, but because we cannot create a competitive connected and greener economy without reference to sustainable management of agriculture and related food production in the context of a strongly growing world population,” he said.

EU leaders agreed to fix a maximum of five targets based on proposals expected from the European Commission at the next EU summit in March. Those targets will be transposed into a set of national targets by June, which would be policed by the commission.

“The core element of that strategy resonates very well with what we’ve been trying to do domestically,” Mr Cowen said.