The credit crunch returns in Europe. Latest events don’t say anything new and, even though initial success is visible, we have not yet managed to overcome the crisis. Overcoming the financial downturn is not a matter of months, but of years, writes French newspaper “Le Monde”, quoting an analysis of the German Minister of Foreign Affairs, Guido Westerwelle.
A high level of debts, apart from the lack of competitiveness in the countries hit by crisis, represents the real cause of the economic and financial downturn. The systematic and sustainable pursuit of fiscal consolidation is a prerequisite for correcting the effects of the downturn. This is the reason why the new budget pact should not be revealed.
François Hollande, the new French President, has announced his intention to renegotiate the budget pact with the purpose of introducing a growth component, while in Germany, the social-democrat opposition imposes conditions for the adoption of this agreement.
However, the budget consolidation is just one of the two pillars – the growth policy being the second – relying on stronger economies. Therefore, resuming the economic growth is a responsibility of member states. Structural reforms have to be observed at national level in order to re-establish competitiveness.
To support these efforts and to complete the fiscal pact, the German side wishes to adopt a growth pact relying on several pillars. First of all, it is necessary to direct the budget of the European Union towards economic growth. EU doesn’t have to spend more, it has to invest its resources in a more efficient manner.
The money for future missions does exist. Indeed, negotiations to ensure the financial framework of the European budgets for 2014-2020 are underway. A EUR 1,000 Billion fund is allocated. Europe should direct this colossal amount of money to resuming the economic growth and to innovation, labour force occupancy and competitiveness. Moreover, fund allocation should be better managed and allocation criteria should be defined.
Secondly, the German Minister of Foreign Affairs believes that we have to spend the unused European funds. Considering the structural and cohesion funds included in the current financial period, around EUR 80 Billion have not been allocated to specific projects. Next to member states, the European Commission now has to invest in these resources rapidly and efficiently.
Thirdly, it is necessary to facilitate access to investment capital. The European Investment Bank (EIB) is an instrument we should used more often and more efficiently targeted to improve the access to credits of SMEs.
Last but not least, we have to encourage infrastructure projects. The lack of funds in the banking system is a problem for large infrastructure projects at European level. As for cross-border projects on European infrastructure development, we have to mobilise private capital and to analyse the innovating methods of public-private partnerships.