In a report on the Broad Economic Policy Guidelines, Parliament says that growing imbalances, aggregate demand and global inflationary pressure may become a significant challenge for monetary policy, as could exchange rate volatility and financial market uncertainty.
Enhancing growth potential
Europe, says the report, needs to enhance its growth potential to increase employment. The report warns that the high levels of the euro exchange rate harm competitiveness and reduce the margin of manoeuvre for monetary policy; it also defends the independence of the ECB in setting monetary policy. It says that in most countries consolidation of public finances would help long-term fiscal sustainability, while modernisation of public administrations could help in this regard. MEPs add that the rise in productivity should go hand in hand with a fairer distribution of the benefits of growth and a strengthening of social cohesion.
EU and the world economy
The report says the EU should aim to shape globalisation rather than merely passively adapt to it – transatlantic relations are particularly important for this purpose. It says measures to combat protectionism both within and outside the EU are needed. Protectionism, the committee argues, undermines rather than defends consumers’ and citizens’ rights. Promoting growth and cooperation with third countries, and further economic openness of the EU are vital to properly managing migration flows and fighting illegal immigration.
Growth and the environment in synergy
MEPs say that environmentally-friendly technologies can help enhance synergies between environmental protection and economic growth, while market based instruments should be used to help meet the European Council’s target to make Europe into an energy efficient, renewables-based economy. Shifting the tax burden from labour to environmental degradation is an effective approach.
Economic growth boosting measures
While respecting financial consolidation stimulation of private investment and public-private initiatives could help meet transport, communication, energy and environmental challenges, says the report. There should be an accelerated integration of the services market. The delivery of effective public services, at affordable prices has, says the committee, an important role to play in a competitive and dynamic economy. Opening up of network industries to competition is a necessity.
A coordinated fiscal framework is needed. It should be favourable to companies, in particular small and medium sized enterprises, and geared to renewing growth and generating employment.
The EU's economic policy coordination process
These recommendations come in an own-initiative report based on a draft by Margarita Starkevièiūtė (ALDE, LT). It also proposes a number of specific changes that could be made to the existing Broad Economic Policy Guidelines in order to take the recommendations into account.
The Council is due to adopt a new set of Broad Economic Policy Guidelines for the next three years this spring, following the EU summit of 13-14 March. These guidelines are the main instrument for coordinating economic policies in the Member States in the context of the Lisbon Strategy, which aims to make the EU economy more competitive. Together with the Employment Guidelines, they form the “Integrated Guidelines for Jobs and Growth.” This is the second cycle of guidelines to be adopted since the Lisbon Strategy was relaunched and refocused in 2005.
Resolution on Lisbon Strategy
The plenary also adopted a resolution on the Lisbon Strategy, in which MEPs emphasise the need for a “vigorous” implementation of the strategy, stressing its importance for Europe’s future prosperity. They say Europe needs to improve its growth rates and to overcome insufficient domestic demand, which must be achieved via increases in revenues linked to increases in productivity and employment.
Re-evaluate financial market oversight
Parliament warns that the European economy’s progress is not immune to crises, and points to the overriding importance of safeguarding the stability of financial markets. The recent sub-prime crisis shows, says MEPs, the need to develop oversight measures - they call for an evaluation of the current system of prudential supervision in close cooperation with Parliament.
Research, development and climate change
The resolution stresses the "extreme importance" of boosting research and development, especially given the "huge opportunities afforded to the European economy" from new technologies and services involved in the "decarbonisation" of the global economy. The goals of energy supply security and reasonably priced sustainable mobility and energy for Europe's citizens can be met by the same strategy as ambitious climate protection. Galileo is welcomed as a key EU project in industrial and research policy. MEPs also welcome Commission plans to establish a "fifth freedom" - free movement of knowledge - to go alongside free movement of goods, services, people and capital which already underpin the internal market.
Helping small businesses
MEPs highlight the role of small and medium sized enterprises and "strongly endorse" the Commission's proposed "Small Business Act." They call for more progress on "better regulation" and reducing the bureaucratic burden on businesses, without compromising consumer protection, but express "deep concern" that significant legislative proposals have been put forward by the Commission without prior impact assessments.
External and trade policy
A new comprehensive external and trade policy, is needed, say MEPs, focusing on worldwide convergence of rules, standards and regulatory cooperation. AM 3The House calls for all EU bilateral or regional trade agreements under negotiation to include "enforceable provisions on the implementation of core labour standards and other aspects of decent work, as well as of multilateral environmental standards." Access to the EU internal market for third countries should be "accompanied by a similar openness to EU investors" by those countries.
Tackling unemployment, eliminating poverty
MEPs say that Europe cannot afford current high levels of unemployment, and call for reforms of labour markets and welfare systems to strengthen incentives and opportunities to work. Such action requires trust between enterprises and workers, so social dialogue should intensify to ensure the "flexicurity" principle is implemented in a comprehensive and balanced way for both employees and employers.
It is unacceptable, says the resolution, that people still live below the poverty line, and calls for a comprehensive approach towards eliminating poverty in the EU by 2010. This requires an "ambitious social agenda" to which Member States should commit themselves at the Spring Summit.
Parliament call on Member States to provide for regulations such as minimum wages or other legal and generally binding arrangements – or collective agreements in accordance with national tradition – that enable full time workers to make a decent living from their earnings.
Best achievements and measures of success
Parliament points out that those countries which are open to external competition, implementing reforms and pursuing budgetary balance, as well as high-quality public and private investment, are the ones that have grown the most and created the most employment. MEPs call again for a better involvement of social partners, national parliaments, local and regional authorities and civil society in the Lisbon strategy.
The House also wants to look beyond GDP and GNI figures as a measure for success. It therefore welcomes Commission work to develop new qualitative indicators, to include the social dimension and the environment.
Author: European Parliament
