European Union Member States need to be serious about investment for growth and agree on an EU budget for the next seven years that shifts the focus of spending to growth-enhancing measures and competitiveness, said the President of the European Commission.
During a press conference on Monday, José Manuel Durão Barroso reiterated that a debt fuelled growth was unsustainable while sharing the Commission’s message for Europe Day (May 9), which celebrated 62 years of European integration.
Whilst pleased about the EU’s response to the crisis by repairing its banking system, strengthening its economic governance, setting up credible financial firewalls and providing unprecedented solidarity to Member States in difficulty, he said the time was now to focus on growth and restoring stability to public finances.
“The crisis has shown that debt fuelled growth is unsustainable. And it means creating the conditions for growth and jobs, through structural reform and targeted investment,” he said, adding that he was “extremely pleased” to see the new momentum that is building in Member States to kick-start the “stalled engine of European growth”.
Durão Barroso said EU Member States needed to seize upon this new momentum to deliver on the “many proposals for stability and growth that we have tabled”, while making clear that it was not possible to have stability without growth and growth without stability.
“Firstly, there must be no let-up in our focus on stability. Reducing debt and deficits is essential to build confidence and cut borrowing costs. Every euro spent on interest payments is a euro less for jobs and investment.
“Secondly, to regain competitiveness there must be an acceleration in structural reforms. There is work to do at both national and EU level. Member States should reduce taxes on labour to stimulate job creation.
“Thirdly, we need to step up investment. The European Council, following the Commission proposal, has already called for approval of the project bonds. This is a concrete way of making funds available now while avoiding putting extra pressure on public finances. This is on track, meaning that a contribution of €230 million from the current EU budget could be used to attract funding of up to €4.6 billion over the next two years for key infrastructure projects in transport, in energy and in the digital area.”
The President of the European Commission also said he wanted to see an increase in the lending capacity of the European Investment Bank.
“Boosting its paid-in capital by at least €10 billion would make available much needed funding in support of job creation, particularly if targeted at small businesses,” he said, adding that he would like to see this agreed at the next European Council in June.