ETUC calls on ECOFIN Ministers to drop the ‘wait and see attitude’ and tackle the economic slowdown by a smart European growth and investment initiative
On 12 and 13 September, the Economic and Financial Affairs Council (ECOFIN) will be discussing the economic situation in Europe. The European Trade Union Confederation (ETUC) calls on European finance ministers to address the economic slowdown by setting up a Smart European Growth and Investment Initiative. Europe needs to break out of economic downturn by adopting an investment approach. The ‘Brussels-Frankfurt’ consensus focusing on merely fighting inflation needs to be abandoned. Demand-side economic policy also has to support growth and job creation.
ETUC’s Smart Growth and Investment Initiative is based on two key principles:
- Use the force of Europe acting together – With governments acting and investing together at the same time and in the same direction, and with a member states’ imports being another country’s exports, the impact on overall European demand will be twice as large.
- Demand-side policy is structural policy – The focus of the European Investment Initiative should be on the need to reduce the overdependence of our economies on oil. This, and not wage moderation or easy firing, is one of the main structural reforms that Europe really needs.
This European-wide smart growth initiative should be implemented by:
- Putting the reformed Stability and Growth Pact to good use. The Commission and the Council should define those types of investment that promote ‘smart’ growth in order to take them (temporarily) out of the excessive deficit procedure.
- The European Investment Bank issuing an international bond to finance the Smart European Growth Initiative, thereby also responding to the high demand for euro-denominated assets coming from the rest of the world.
- A pan-European crackdown on tax avoidance and evasion by the very wealthy and by corporations. In doing so, significant revenue can be generated to invest in smart growth while benefiting all members of society.
- Organising European economic solidarity so that those Member States having low deficits and high current account surpluses drive growth for the rest of the European economy.
ETUC Deputy General Secretary Reiner Hoffmann emphasises: ‘It would be a tragic mistake for economic policy makers to react to the downturn by continuing with a ‘wait and see’ attitude or, worse, by engaging in national economic and social competition against each other. Instead, Europe needs to increase investments to get out of this economic slowdown.’
He added: ’By nationalising two major credit institutions, the US has formally buried the Washington-Brussels-Frankfurt consensus of ‘laissez-faire, laissez-passer’. Europe should do the same and switch to growth and job-friendly demand-side policies.’
ETUC June Executive Committee resolution Time to act together
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