AFP: EU leaders under pressure to revive economies ahead of summit
Updated 2009-03-30
BRUSSELS, March 17, 2009 (AFP) - EU leaders face massive pressure ahead of a summit this week to plough more taxpayer money into their faltering economies, but are showing little inclination to answer growing calls for action. The leaders, at a meeting on Thursday and Friday in Brussels, aim to form a common European front for a summit on April 2 in London of the Group of 20 leading economic powers.
Washington has pressed its European allies in the run-up to the London meeting to do more to prop up their economies and play a bigger role in reviving global demand.
But EU governments are also facing mounting calls at home to do more to jump start economic activity, with many companies and industries warning of sweeping job cuts if the beginnings of recovery do not soon emerge.
However, European countries have rejected pressure for a second wave of economic stimulus measures, insisting the London summit should have a firm focus on revamping the global financial architecture.
"We have to explain to the Americans that we are doing enough on the stimulus," said Czech deputy prime minister Alexandr Vondra, whose country holds the European Union's rotating presidency.
The United States is banking on a 787-billion-dollar (606-billion-euro) stimulus plan to drag the world's biggest economy out of its deepest recession in decades.
Meanwhile, the 27-nation European Union has committed to economic stimulus measures in 2009 and 2010 worth 400 billion euros (520 billion dollars), equivalent to 3.3 percent of the bloc's gross domestic product. The figure includes both national and EU level stimulus measures as well as automatic increases in social spending, such as unemployment benefits, which kick in when the economy weakens.
European Commission chief Jose Manuel Barroso warned on Tuesday it would be "imprudent" to rush out plans for new economic stimulus measures when the first package was just getting underway.
"If necessary, we should be prepared to take additional measures, I won't hide it. But let's not come out every day with a new plan before we've applied the one we've adopted. I hope there will be a consensus on that." The BusinessEurope employers association warned last week that 4.5 million Europeans risk losing their jobs this year due to the increasingly severe recession.
In the steel industry alone orders have fallen by nearly 60 percent since the end of last year while prices have dropped by half, threatening thousands of jobs in the sector, according to the Eurofer industry association. "What we now urgently need is short term measures to increase liquidity in the market, a level playing field on trade, and support for research and development," said Eurofer head Gordon Moffat.
While plans for a coordinated increase in stimulus measures are not currently in the cards, EU leaders are ready to increase an emergency credit line available for non-eurozone members in dire economic trouble. According to draft conclusions from the summit, they want to "rapidly examine the possibility of increasing the ceiling for the Union's support facility for balance-of-payments assistance."
The EU more than doubled the amount of loans available through the facility last December to a total of 25 billion euros, but the fund could get quickly drawn down as the number of countries seeking to tap it grows.
So far Hungary is drawing 6.5 billion euros from the fund and Latvia has secured 3.1 billion from it while Romania is in the process of seeking funds from it as well.
