EUROPEAN COUNCIL president Herman Van Rompuy has issued a clarion call to EU leaders for decisive action to recalibrate the union’s ailing economy, warning in a speech that the long-term outlook “is not bright”.
In his first major public address since he formally took up his duties on New Year’s Day, Mr Van Rompuy said the union will have to double its average growth rate to 2 per cent “if we want to keep up with the rest of the world, and with our self-image”.
Addressing a meeting of Germany’s Christian Social Union party, he also said a new 10-year economic strategy for the EU will have to include measures that would bind governments to their policy commitments.
Mr Van Rompuy warned against western Europe losing its industrial base. “We will have to keep a very sharp eye on what is happening with our industrial base, by what the jobs that disappear are replaced, if at all.” A further priority would be to stabilise Europe’s public finances and reduce public debt to keep long-term interest rates low and the euro stable.
He said the deterioration in financing conditions and higher risk aversion may permanently depress investment levels, suggesting the EU should adopt an innovation-driven economic policy and raise the number of highly skilled workers.
“The measures adopted during the crisis proved to be excellent short-term palliatives. What we need now is reforms delivering long-term benefits,” he said.
With EU leaders preparing by the middle of this year to adopt a new economic plan for the period to 2020, he said the previous 10-year plan yielded some results but not as much as was hoped and not as much as was needed.
“The instruments of the Lisbon process are rather soft. ‘Peer review’ and ‘benchmarking’ are useful to collect and compare data, but they do not on their own create political commitment,” he said. “Therefore, we must find ways to enhance such shared commitment. This is especially true for the member states who share the euro. Although every national government has its own responsibility for economic and social policy, the situation in one member state affects all the others.”
Mr Van Rompuy suggested that the Copenhagen climate change accord was a “big step forward” although much would depend on further implementation.
“Within a few weeks, we will know the quantitative goals of CO2 reduction. Then we will know exactly how big the distance is between the pledges that have been made in Copenhagen and what we still need to reach the aim of a maximum temperature rise of 2°C.”
