| Author (Person) | Davies, Eric | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Publisher | ProQuest Information and Learning | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Series Details | 20.10.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Publication Date | 20/10/2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content Type | News, Overview, Topic Guide | In Focus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The Brussels European Council of 16-17 October 2003 discussed the European initiative for growth - a proposal intended to promote economic growth by stimulating the development of transport, energy and telecommunications networks and by promoting investment in research and development. Leaders endorsed the principles of the Commission's proposal and set out guidelines for pursuing the initiative ahead of further discussions on 12-13 December. At that meeting they expect to take 'concrete decisions' on which elements of the proposal to pursue, and how. Background The March 2000 Lisbon European Council launched the Lisbon Strategy, intended to make the European Union 'the most competitive and dynamic knowledge based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion' by 2010. In June 2003 the Thessaloniki European Council approved a European Commission proposal aimed at supporting investment in 'knowledge and networks' covering three key areas of the Lisbon Strategy:
The proposal - A European initiative for growth - was seen by the Commission as a way of enabling the Union to stimulate the economic development required if the employment targets of Lisbon are to be met. In an economic climate recently characterised by 'stalled growth, weakened business and consumer confidence, subdued investment and signs of a cyclical rise in unemployment', the Commission argued in its Communication that, although the Union 'remains poised on the edge of growth ... something more is needed' and that it is the responsibility of the Commission and the Member States to 'give a strong signal of economic governance in order to boost confidence in the Union's economic potential and consolidate economic growth.' The European initiative for growth prepared for the October European Council included four groups of recommendations.
Funding for the initiative should come, according to the Commission, from a mixture of sources: the existing TENs budget (currently worth €600 million per year; the Commission wants contributions to priority projects raised from the present 10% to 30% in order to speed up projects), the Union's Sixth Framework Programme, the European Investment Bank, and Member States. In a related development, the Commission announced on 1 October that it had adopted a new list of projects under the Trans-European Transport Network (TEN-T). The list was based on proposals put forward by a High-Level Group chaired by former Commissioner Karel Van Miert, and totaled 29 projects considered to be of 'European interest', costing some €220 billion by 2020:
The Commission's idea of investing in transport projects to boost economic growth has been criticised. The BBC reported the views of one economist who said that the investment would be 'dangerous ... because such projects tend to be lengthy affairs, and as such their effect on growth would be severely delayed' (Transport is key to growth, EU says). The same report also suggested that 'many European governments' would prefer money to be saved or invested in research and development, not spent on construction projects. The Financial Times greeted as 'ridiculous' a claim by Commission President Romano Prodi that infrastructure investment 'could increase the EU's gross domestic product by 0.6 per cent and by up to 1 per cent in the medium term', arguing that his conclusion was 'based on a series of questionable assumptions' ( The FT also claimed that 'similar plans to boost EU transport links in the mid-1990s faltered owing to lack of co-ordination and unwillingness of national governments to channel infrastructure spending into cross-border projects' ( Speaking to the European Parliament on 8 October, President Prodi argued that 'the time has come to get our economy on the move again' and that 'There can be no doubt that a European transport and communications network is essential if we are to integrate our economies and increase cohesion within our enlarged Union. By demonstrating our determination we will send out a clear signal that the Union is at last able to take economic decisions that can no longer be put off.' And in a speech to the European Council on 17 October, he made it clear that the Commission's aim 'is the mobilisation - quickly - of public and especially private funds to finance certain infrastructure and R&D projects that have a truly European scale.' The European Growth Initiative at the October 2003 Brussels European Council Under the heading 'Relaunching the European economy', the Presidency Conclusions issued after the Brussels European Council devoted a section to the European initiative for growth. Putting the initiative in context, the preamble stated that: 'After a period of uncertainty, some positive signs are emerging in Europe. An improvement in the international economic environment, low levels of inflation, stabilised oil prices and better conditions in the financial markets are key factors behind a pick-up in economic activity, which is expected to strengthen in the course of 2004. Since the situation remains fragile, a message of confidence in the European Union's economic potential is needed. Maintaining sound macroeconomic policies, accelerating structural reforms and promoting investment in infrastructure and human capital are key priorities. In this context, economic policies should continue to be aimed at producing job-creating and sustainable growth and enhancing economic and social cohesion.' The decisions of the European Council were then presented under two main headings: 'boosting investment in key projects' and 'creating favourable conditions for growth and employment'. The proposed TENs projects were said by the European Council to have a 'two-fold positive effect', by both boosting growth directly and by helping the benefits of the internal market to be realised. Participants therefore agreed to examine the possibility of introducing a higher rate of Community co-financing for TENs projects. The further development of broadband networks was considered essential for the development of the knowledge-based economy envisioned by the Lisbon summit. 'Innovation, research and development and skills are crucial for Europe's growth potential' stated the Presidency Conclusions, and action will now focus 'on mobilising investment and getting the right regulatory conditions in areas such as research infrastructures, science parks, industrial innovation and research and development projects, information and communication technologies, the financing of education and training facilities, through increasing investments in education and a better integration with labour and social policies.' To enable firm decisions to be taken at its next summit in December, the European Council invited the Commission, the European Investment Bank and the Council to establish a 'quick-start programme' of projects. In addition, the Commission and the EIB were asked to submit their final thoughts on the initiative for growth to the 25 November meeting of Economics and Finance Ministers. Member States were encouraged to 'complement the Growth Initiative by national growth programmes', which will be coordinated by the European Council. In terms of enhancing the Union's economic competitiveness, the European Council asked the Commission to develop proposals 'to improve the industrial framework with a view to avoiding de-industrialisation'. Specific issues mentioned included measures to maximise the benefits of the Internal market (e.g. stimulating entrepreneurship, transposing legislation into national law within specified time limits, completing the Financial Services Action Plan). Industrial policy was also of concern, with leaders calling on the Council and Commission to 'address the needs of specific industrial sectors, especially the manufacturing sector, in order for them to enhance their competitiveness'. Notably, the Commission was requested to providing a comprehensive impact assessment on businesses of proposed legislation. On research and innovation, the meeting called for action to be taken to pursue the target of investing 3% of GDP in research, requesting more involvement by Member States 'to boost public and private investment in research and innovation', greater coordination between public and private-funded research and promoting public private partnerships in research, and implementing the e-Europe Action Plan. The European Council also considered the social dimension of the growth initiative, noting the need not only for job creation, but also for coordinating policies on social protection. A call was made for greater coordination of pension systems and ensuring that they 'are financially sustainable and are capable of meeting the challenges of modernisation.' Leaders looked forward to receiving the report of the European Employment Task Force at an extraordinary Social Summit in December. Finally, leaders noted the role of environmental protection and sustainability in promoting economic growth, and called for the Commission to submit its Environmental Technology Action Plan by the end of 2003 and for a proposed Directive on a greenhouse gas emission trading scheme (COM(2003)403) to be adopted as soon as possible. Further information within European Sources Online European Sources Online: Topic Guides
European Sources Online: Financial Times
Further information can be seen in these external links: EU Institutions European Commission
DG Employment and Social Affairs
DG Energy and Transport
DG Environment
Council of the European Union
News organisations BBC News Online
Eric Davies Background and reporting on the week's main stories in the European Union and the wider Europe |
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