A European Economic Recovery Plan
In the face of the economic crisis of October 2008, the European Union is equipping itself with an Economic Recovery Plan aimed at proposing both European and global solutions. On the one hand, the plan proposes short-term action at the level of businesses, individuals and banks. On the other hand, it aims, in the longer term, to develop a clean economy with low CO2 emissions which is capable of encouraging future growth.
Communication from the Commission to the European Council of 26 November 2008 – ‘A European Economic Recovery Plan’ [COM(2008) 800 final – Not published in the Official Journal].
The European Economic Recovery Plan is a response to the global economic crisis which affected the real economy in 2008. It sets out the broad lines of a coordinated European approach which involves:
- swiftly stimulating demand;
- helping the most vulnerable people affected by the economic downturn;
- preparing Europe to be competitive with a view to future growth;
- taking advantage of this period of upheaval in order to accelerate the establishment of a cleaner economy with more concern for the environment.
The European Commission proposes that Member States and the European Union agree on an immediate budgetary impetus amounting to EUR 200 billion.
The plan is intended to operate at both European and global level.
Solutions at European level
At financial market and macro-economic level
The instability in the financial markets triggered the crisis in the real economy. It is important that the banks should re-focus on their primary activities of providing liquidity and supporting investment in the real economy.
The European Investment Bank (EIB)will increase its yearly interventions in the European Union by some EUR 15 billion in the form of loans, equity, guarantees and risk-sharing financing, as well as investment from private sources.
Budgetary policy will have a role to play in stabilising economies and sustaining demand. This recovery will take place within the framework of the Stability and Growth Pact and the priorities of the Lisbon Strategy.
At the level of individuals
The Plan aims to help individuals who have lost their jobs and are suffering the social consequences of the crisis. In this perspective, it will reinforce the activation schemes, in particular for the low-skilled and vulnerable, in order to get them into training or even help them to re-train with a view to matching the supply and demand of jobs.
To this end, the Commission will use the European Social Fund and the European Globalisation Adjustment Fund in order to finance the costs of training and job placement for those who are made redundant.
In addition, Member States are advised to reduce their employers’ social charges on lower incomes to promote the employability of lower-skilled workers. Similarly, solutions such as service cheques for household and child care, or temporary hiring subsidies for vulnerable groups, are encouraged.
A reduction in the VAT on labour-intensive services is also envisaged.
At the level of businesses
Businesses must have access to financing on the same basis as the banks. Small and medium-sized enterprises and micro-enterprises are the most exposed and must therefore be the focus of urgent steps. It is envisaged that the European Small Business Act will be implemented to this end.
The Commission will put in place a simplification package to speed up its State aid decision-making.
At the level of the environment
It is becoming vital to develop a clean economy. In this perspective, the European Union must equip itself with new businesses and industries, as well as environmentally-friendly infrastructures.
The Commission plans in particular to invest in trans-European transport projects, while the EIB will increase the financing of investment to tackle climate change and to improve energy security and infrastructure.
The Plan also provides for action at the level of research and innovation in order to develop "green products", particularly in the construction and automobile sectors.
Solutions at global level
The Plan aims to reinforce closer collaboration between the European Union and its international partners in economic and climate matters.
The European Union must also maintain its commitments to developing countries in the context of the Millennium Development Goals (MDGs) and Overseas Development Assistance (ODA), in particular by developing new instruments to help those countries deal with the direct consequences of the crisis whilst maintaining sustainable development.
In the face of the crisis, the European Economic Recovery Plan is designed to create a basis for agreement between Member States to get Europe’s economy moving again. Although the Plan contains short-term action, it also falls within the Lisbon Strategy.
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