22 May 2012

EP: Beyond austerity - how to achieve growth without loosening the reins on debt control

Growth vs austerity

Nicolai Wammen, the Danish minister for European affairs, was at the debate to represent the Danish Presidency. He said to focus on austerity versus growth was to make a false distinction, as there can be no growth without economic stability. Reforms such as full single market implementation could help to boost the economy, while growth could in turn help to stabilise public finances further. Mr Wammen pointed out that although the EU summit on 23 May is informal, it is a stepping stone to the full EU summit in June, where decisions will be taken.

Commission vice-president Olli Rehn,  responsible for economic and monetary affairs, said: "Once again we are at a turning point in the debt crisis". Mr Rehn added that Member States are ready to take action. For this, sound public finances are vital, which is why he called for deeper economic union as a step towards joint debt issuance. For him there can be no sustainable growth without sustainable debt, as "every euro spent on debt financing is a euro less for investment". The commissioner said the European Commission wanted Greece to stay in the EU and the eurozone, as "the alternative is much worse".

Dutch Christian-Democrat, Corien Wortmann-Kool, warned that growth cannot come at the expense of fiscal consolidation: "Our economic growth should be based on solid foundations and it is time to deal with our deficits. We need to restore our competitiveness, our exports and target youth unemployment and ensure a better harmonisation of our legislations. Red tape should also be lighter, and more investment made in research and development, through the European Investment Bank and project bonds."  

Investment

Austrian Social-Democrat, Hannes Swoboda, stressed it was up to the Greeks to decide if they want to stay in the euro, but added that if a reform-minded government open to negotiation is formed in Athens, then measures to improve the social situation in the country can be discussed.

Belgian Liberal-Democrat, Guy Verhofstadt, said: "This crisis is not about Greece or other countries, it's not even an economic crisis, it is a political crisis. EU leaders are not able to take the right decision at the right time." Mr Verhofstadt said what was needed was a real economic and fiscal union; mutualisation of debt along with the establishment of a redemption fund to help bring down interest rates; a growth pact with project bonds; and a bigger role for the European Investment Bank to relaunch the economy.

German Green MEP, Rebecca Harms, said that the situation in Greece showed that austerity programmes pushed by the EU and the International Monetary Fund are a failure that put the country in a downward spiral, threatening to draw in other Member States and eventually the whole of the EU. According to her, Greece needs to be granted more time to rebalance the budget. Also Greece should stay in the euro area, as this was the best solution for the country and the EU as a whole.

Other options

British Conservative, Martin Callanan, stated: "The EU needs to do less and to do better". There was a need to place the single market at the heart of the economy and  implement a free trade deregulatory pro-competitiveness agenda.

British UKIP MEP, Nigel Farage, said: "The euro was supposed to create growth and jobs but is actively destroying them", adding that current EU proposals are "economic suicide for an entire continent". He said that if Greece leaves the euro it will have a few difficult weeks but then the country will start to innovate to find alternatives to expensive import. "Greece outside the euro may be an inspiration for Spain, Portugal and other countries."

Gabriele Zimmer, German member of the Confederal Group of the European United Left - Nordic Green Left, said the economy in Greece was suffering because of austerity measures. According to her, focusing on austerity measures would not lead to sustainable, inclusive development. She said it would be better to combat poverty and the exhaustion of natural resources.

Press release

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