EU seeking convergence of economic policies

Council and Commission presidents strike softer note on economic co-ordination than the EU’s presidency.

The presidents of the European Council and European Commission said today that member states must accept tighter co-ordination of their economic policies if they want Europe to recover from the financial crisis.

Both, however, stopped short of endorsing calls from Spanish Prime Minister José Luis Rodriguez Zapatero for “binding” mechanisms to force member states into greater co-ordination.

José Manuel Barroso, the president of the European Commission, said that tighter co-ordination would be a feature of the ‘eu2020’ strategy for growth and employment that he will propose next month.

The ten-year strategy will contain a series of policy objectives and targets to boost the EU’s economic performance, including structural reforms to national labour markets and reforms to public spending.

Barroso said that he wanted eu2020 to contain more rigorous governance mechanisms than those used under its predecessor, the Lisbon strategy, in order to ensure that member states followed agreed policy objectives. The Lisbon Strategy is widely considered to have been poorly implemented by member states.

Barroso indicated that he may revive recommendations made by Wim Kok, the former Dutch prime minister, in a report he prepared for the Commission in 2005. Kok’s recommendations, which included naming and shaming member states that fail to implement Lisbon reforms, were not accepted by member states at that time. Barroso said, however, that the political environment was now right to “move forward” with these kinds of ideas. He said it was “essential” for governments to feel a sense of commitment to the new strategy.

Herman Van Rompuy, the president of the European Council, said that eu2020 should have “stronger engagement at the highest level” than the Lisbon Strategy enjoyed.

“We need tighter governance and a better control of the process,” he said.

Van Rompuy has called a summit of national leaders on 11 February to discuss the new strategy. Both he and Barroso stressed that the success of eu2020 is vital to help Europe recover from the crisis, not least by increasing Europe’s potential for economic growth.

Zapatero, whose country currently holds the EU’s rotating presidency, yesterday went further, calling for incentives and penalties to ensure member states implement eu2020 commitments.

He said that eu2020 “must include, in my opinion, incentive measures and, if advisable, introduce corrective measures”. “[We need] to make sure each member state has a binding incentive,” he said.

Diego López Garrido, Spain’s Europe minister, suggested yesterday that member states could be given larger allocations from the EU structural funds if they comply with eu2020 goals.

Zapatero said that economic co-ordination under Lisbon was “not an experience one could call satisfactory”, and that governments had “failed” to comply with the strategy.

He said that the EU must “strengthen its economic co-operation” and that this should be achieved in part by equipping the Commission with “new powers”.

The eu2020 strategy should “introduce a qualitative leap in our economic union,” he said.

Zapatero said that eu2020 should prioritise the deepening of the internal market in the areas of energy and digital technology, and the creation of a “European financial area”.

Van Rompuy described Zapatero’s position as “very ambitious”.

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