Brussels, 4 March 2009
Commission calls on EU leaders to stay united against the crisis, move fast on financial market reform and show global leadership at G20
The European Commission is calling on EU leaders to further step up coordinated European action to fight the economic crisis. In its communication to the European Council summit on 19-20 March, the Commission sets out proposals for building on the extensive support already being given to the real economy and to employment. The Commission's communication unveils a comprehensive reform of the financial system based on the de Larosière report. It shows how a clear and united commitment to this ambitious programme can pave the way for the EU to give a global lead at the G20 summit in London on 2 April.
Commission President José Manuel Barroso said: “The Spring European Council must send a strong signal to citizens, businesses and the world. Yes, there is a way out of this crisis. Yes, Europe has the unity, the confidence and the determination to win this battle. We must forcefully implement the agreed recovery plan in a coordinated way. We must use the single market to the full. Today we are asking EU leaders to agree on a comprehensive action plan. To do everything possible to protect our citizens from unemployment. To clean up financial markets on the basis of the de Larosière Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 summit in London."
The banking system
The Commission's communication begins with an overview of the measures taken since autumn 2008 which have prevented the meltdown of the European banking industry and thus prevented countless bankruptcies and job losses. It urges Member States to act quickly to restore confidence and get bank lending flowing again, in particular by implementing the guidance the Commission issued on 25 February on removing impaired assets from banks' balance sheets.
Financial regulation and supervision
The Commission endorses – and asks EU leaders to endorse – the key principles set out by the de Larosière Group. The Commission calls for a supervisory system combining much stronger oversight at EU level with maintaining a clear role for national supervisors. It backs the Group's proposal to set up an early warning body under ECB auspices to identify and tackle systemic risks. The Commission supports the Group's recommendation for a core set of regulatory standards throughout the EU.
In April the Commission will bring forward initiatives already in the pipeline on hedge funds, private equity and remuneration structures. Following an impact assessment, the Commission will put forward to the June European Council a detailed timetable for further measures based on the de Larosière report. It will bring forward proposals in the autumn on the new supervisory framework and on issues including: liquidity risk and excessive leverage; further reinforcing protection for depositors and policy holders; and effective sanctions against wrongdoing.
The real economy
The communication points to good first results of the European Economic Recovery Plan. The overall fiscal support to the economy from European and national measures and from automatic stabilisers amounts to at least 3.3% of GDP over the 2009-2010 period. An annexe summarises 500 national measures and concludes that they are broadly in line with the principles that recovery action should be timely, targeted and temporary.
The Commission calls on EU leaders to endorse clear principles for further action, in line with the single market, with open trade worldwide, with building a low carbon economy and with returning to sustainable public finances as soon as possible.
The Commission repeats its call for Member States to agree on the targeted investment of €5 billion euros in energy interconnections and broadband.
The Commission's contribution calls for Member States to step up efforts to tackle unemployment – which could approach 10% in 2010 for the first time since the 1990s - and social exclusion. These efforts will also help maintain demand and prevent further job losses. They should be a central plank of national stimulus plans. The Commission invites Member States to use measures such as financial support for temporary working-time arrangements, boosting income support for unemployed people, lowering non-wage costs for employers and boosting investment in skills and retraining. At European level the Commission calls for rapid approval of its proposal to allow an immediate increase of €1.8 billion in advance payments under the European Social Fund.
The Commission also sets out a road map towards the European Employment Summit in Prague in May, which should agree on further concrete measures to save jobs and create them in the sectors of the future. The Commission will organise a series of workshops with all key stakeholders in different Member States in the approach to the summit.
Promoting global recovery – how the EU should lead
The Commission asks EU leaders to agree on a number of areas where Europe can and should give a firm lead on 2 April at the London G20 summit, building on the success it achieved by speaking with one voice at the Washington Summit in November 2008.
The EU should make a united push to improve the global financial and regulatory system, focusing on: better transparency and accountability; appropriate regulation of all financial actors; tackling difficulties caused by uncooperative jurisdictions; boosting international supervisory cooperation; and reforming the IMF, Financial Stability Forum and World Bank.
Europe should also promote global recovery by calling for a review of the global impact of fiscal measures taken so far, by promoting open trade and by inviting the London Summit to launch a multilateral initiative on trade finance and to reaffirm the Washington commitment to the Millennium Development Goals.
The full text of the Commission's communication to the European Council will be available at: http://ec.europa.eu/commission_barroso/president/index_en.htm