Severe recipes for the economy

"Recommendations" of the College to EU28. Growth and work necessitate reforms

Deep transformations for a fresh start and to grow in the middle and long term, continue reforms “even when they are not popular”, in order to avert the possibility of future crises”. The President of the EU Commission José Manuel Barroso gave a “political” interpretation of the “economic recommendations” provided by its college on June 2, which will be submitted to the attention of the European Council at the end of the month. “The fundamental challenge for next year – the head of the Executive said in clear words – is political: How do we keep up the momentum for reform in the EU without the pressure of the crisis bearing down on us? If politicians show leadership and summon the political will to see reform through – even if it is unpopular – we can deliver a stronger recovery and a better standard of living for everyone”. Taking on new challenges. Barroso’s message is far from predictable, although it passed unnoticed in his evaluation of the “recommendations”. The Portuguese politician, in office until the coming October 31st, tackled a theme that he holds dear, which over the past five years was reason for attrition Member States’ chancelleries and governments: “National politicians are called to assume their responsibilities. It’s pointless to ascribe national problems and flaws to Europe. We have to put words into action”. In other words: each Country should keep national accounts in order, pursue reforms aimed at stabilizing the economic and financial system, thereby releasing energies for investments, training, research… But these recipes are hard to implement – especially in situations of recession – as they call upon governments to truly govern, directing the limited resources available in one direction rather than the other, putting themselves on the line with respect to the judgment of public opinion. Political courage is needed, yet someone in recent years has shown it (see Berlin), reaping good fruits at economic level, in terms of employment, and in the elections. Barroso concluded with an optimistic tone “”country-specific recommendations act as a compass showing the direction. The efforts and sacrifices made across Europe have started to pay off”. A post crisis situation? In reality, data on employment released the following day, June 3, is reason for concern: over 10% are without a job in EU28 and as many as 11.7% in the eurozone; 25 million people are at the margins of the job market. Also for this reason the Commission insists that reforms are needed “to consolidate recovery and create new jobs” in an economic situation – daringly – described as “post-crisis”. A package of targeted and relatively accurate remarks signal the conclusion of the “European semester”, a tool devised to respond to the crisis of sovereign debt, aimed at harmonization of economic policies. For the Commission, the EU economy is on much firmer ground, however “growth will remain uneven and fragile over 2014-2015, so the momentum for reform must be maintained”. One thing is sure: “the difficult social situation will only improve slowly”. “Good fruits”. Recommendations regard 26 States, except for Greece and Cyprus that will have to follow dedicated adjustment programs. The Commission maintains that recovery can be glimpsed “in most countries”, only Croatia and Cyprus are expected to show negative growth rates this year. At the same time, “public finances continue to improve”, while deficits are expected to fall under the 3% limit of GDP for the first time since 2008. Austria, Belgium, Czech Republic, Denmark, Slovakia and the Netherlands are looking forward to exiting the excessive deficit procedure, after which 11 states will still remain under observation (in 2011 they were as many as 24). From this perspective, France is under “close scrutiny”. In the meantime, reforms in the ‘most vulnerable’ countries, i.e. Ireland, Spain and Portugal are France are starting to deliver results, while Greece is expected to return to grow in 2014. Concrete commitments. But there’s a lot of “homework”. Pretty much all countries are called to “combat high unemployment, inequality and poverty”. Nevertheless it is urgent to “adopt employment-friendly taxation”, shifting taxes from labour to consumption and immovable property, as required for Italy. Italy, Greece, Spain, Lithuania, Slovenia, Croatia and Cyprus necessitate a banking system that will finance business and investment. Seven Member States – Belgium, Ireland, Greece, Spain, Italy, Cyprus and Portugal – are called to reduce their public debt, which at present amounts to more than 100% of GDP.

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