Since 2000, the Spring European Council has been used to define and take stock of the EU strategy for growth and jobs. This time the mood was particularly gloo: Europe is being pushed for recession, the Eurozone crisis is far from over, democracy in being undermined by several reasons.
Several Member States no longer have conditions to implement the Europe 2020 Strategy. They are trapped in a recessive spiral by lack of internal and external demand and by lack of credit for SMEs, which is destroying many viable companies and viable jobs, raising unem- ployment to unprecedented levels and triggering large flows of emigration and brain drain. The youth unemployment rate has reached 40% in some countries, announcing a lost gener- ation.The pressure for quicker reduction of the public deficit have led them to downgrade the welfare system, as the tax burden is already too high. In these conditions, investing in innovation or in green technologies or reducing poverty seem an unaffordable luxury. Against this background of austerity without long term vision, most of the reforms which are needed to make the transition towards a new growth model become much more difficult to implement. The differences of speed between Member States in the implementation of the Europe 2020 Strategy are now turning into divergences: some Member States are going backwards.
The most vulnerable economies remain vulnerable: those which are under troika pro- grammes looking for invisible exit conditions; a new one Cyprus, still waiting for a rescue which would trigger a new crisis story; bigger economies, such as Spain and Italy, protected by the ECB umbrella, but also unable to shift their path for more growth and more con- sistent reduction of the debt levels. All cases have special features but all of them are con- fronted with this problem. This trapped situation is eroding the political support for the rul- ing parties whatever their political colour, and paving the way for anti-European move- ments. The last general elections in Italy have sent a powerful message. Bersani won with the Partido Democratico, but his victory was not clear enough, constraining Italy to three bad possibilities: a minority government, a non-partisan government again or… repeating general elections.
Since June 2012, the European Council had recognized that some stronger European instru- ments are needed to overcome the Eurozone crisis. But the implementation of the Compact for Growth and Jobs, including EIB loans and swifter structural funds which adopted after Hollande’s proposal is lagging behind. Nevertheless, even this is no longer enough: funda- mental innovations are needed:
– to restore access to credit, such a banking union with a single supervisory mechanism, an harmonized deposit guarantee and bank resolution mechanisms;
– to enable real convergence for competitiveness, growth, jobs creation and better stand- ards, such as eurozone fiscal capacity
– to bring down the cost of public debt service, such as the stabilizing role of the ECB or a common instruments for debt management
These were some of the proposals of the blue print for a Genuine Economic and Monetary Union presented by the four EU presidents since June 2012.
But the overriding priority to be given to fiscal consolidation has watered down these initial intentions. The focus of German government to secure the best outcome in the next German Federal elections is shaping all this discussion process on the ways to complete the Economic and Monetary Union. The same is happening in the discussion about the financial multian- nual framework, which led the European Council of 7 February to adopt the fist Community budget which is smaller than the previous one. But, in this theme, the European Parliament can still make something which its co-decision power.
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