Business World

Monday 25 September 2017

Barroso pushes €10bn anti-austerity investment plan

European Commission boss Jose Manuel Barroso. Photo: Getty Images
European Commission boss Jose Manuel Barroso. Photo: Getty Images

Sarah Collins in Brussels

THE European Commission (EC) has urged countries to make "targeted investments" in growth as part of a crisis-busting strategy that marks a shift away from a focus on strict budgetary austerity.

EC chief Jose Manuel Barroso yesterday asked governments to approve a €10bn capital boost for the European Investment Bank and said they should pledge more cash to the EU budget to pay for transport, energy and broadband upgrades across the bloc.

"After stability measures, after structural reforms, we need to step up investment," he told reporters in Brussels. "I am extremely pleased to see the new momentum that is clearly building in our member states to kick-start the stalled engine of European growth."

The EC is riding a wave of pro-growth sentiment that saw France's Socialist leader Francois Hollande and Greece's radical leftist coalition Syriza sweep to power on anti-austerity tickets in separate elections last weekend.

European Central Bank head Mario Draghi has also called for a "growth compact" to sit alongside the EU's fiscal compact treaty, which is being put to a vote in Ireland on May 31.

"A consensus... is now emerging regarding the need to combine consolidation and growth, and it's true that the debate in Greece and the debate in France has highlighted this urgency, the urgency of combining fiscal consolidation with growth," Mr Barroso said.

However, he said bailout countries -- including Ireland -- have little choice but to focus on "painful" spending cuts or risk a messy default.

"But the programme countries, they have no alternative -- except disorderly default, but I think it's not an alternative -- than to pursue courageous fiscal consolidation measures, structural reforms for competitiveness and of course, mostly also benefitting from European solidarity, some targeted investment," he said.

His comments came the same day as European Council president Herman Van Rompuy convened an emergency growth summit for May 23 in Brussels, a week before Irish people go to the polls on the treaty.

The summit will be the first chance for EU leaders to hold official talks with Mr Hollande, who promised to renegotiate the treaty if he was voted into office.

Finance Minister Michael Noonan complained this week that the lack of clarity surrounding Mr Hollande's plans for the treaty did not "sit well" with the Government.

Irish EU commissioner Maire Geoghegan-Quinn told reporters in Brussels yesterday that the referendum was about securing Ireland's continued access to EU bailout funding and its place in the eurozone.

"This particular treaty is a very different treaty to any other treaty that we had before. This is simply and solely about the fact that Ireland will have access to a mechanism that will give it money in the event that any government, this one or another one, needs money at any time in the future," she said.

"And equally importantly it sends an unmistakably clear signal to those that are investing in Ireland and in the market that Ireland means business and that Ireland's future lies as a central player in the eurozone.

"If Irish people want to do one thing themselves about the crisis, they need to get out and to vote Yes."

Irish Independent

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