Will This EU Brainstorm Unlock Growth?
The European Union has turned its gaze to tax evasion and energy policy this week, as the embattled economic zone searches for growth.
Leaders of the 27 countries are slated to meet Wednesday in Brussels to reform how tax information is shared between countries, as austerity-laden countries seek to shore up the red on their balance sheets. Previously, some countries such as Austria and Luxembourg had been granted exemptions by the EU that allowed them to withhold sharing tax information with one another. However, this will be phased out with a transition period after which all EU members will be required to share such data with one another as the countries seek to obtain information on how each member tracks earnings of its citizens throughout the euro zone.
Energy policy will also be discussed at length, with leaders focusing on the economic ramifications of “the supply of affordable and sustainable energy” throughout the EU. Up for discussion are: energy prices, state aid rules for energy investments, and ways to boost financing for energy-efficient projects.
In June, German Prime Minister Angela Merkel and French President Francois Hollande hope to have reached agreement in matters of growth and austerity, when the bloc meets again to sort out its economic woes — specifically, youth unemployment. Previously, both countries had released a joint paper before such conferences, but with the visions of each country remaining quite different, no such paper will be put forth ahead of June’s meeting.
The French President continues to hope for ways to work with Merkel, indicating that “with Mrs. Merkel, we’ve always gotten there, even if it took time.” His remarks came during a press conference in which he thanked France’s wealthiest, an attempt perhaps to shore up his image with the nation’s entrepreneurs as his ratings sit at record lows.
Hollande has been embattled for some time over his campaign rhetoric and promises, and the economic realities imposed on him after taking office. Following his election, he quickly took action to restore the retirement age to 60, the number it had been prior to his predecessor’s presidency. Yet, he hinted that this may be subject to change as France seeks to reform its pension system, compliant with EU wishes, adding, “As long as we’re living longer, we’ll need to work a bit longer.”
Merkel, for her part, has stressed the need for EU members to reach a consensus on how to achieve growth, specifically pointing to France to pursue competitive reforms. As France faces record unemployment and recession, Merkel said, “What we need above all is a common understanding in Europe — and there unfortunately isn’t one yet — of what actually makes us strong, and where growth comes from.” Germany continues to advocate reductions in deficits and more flexibility in labor markets as part of the answer. Moreover, with the European Central Bank hard-pressed to spur growth on its own, Berlin continues to pressure countries to act, with German Finance Minister Wolfgang Schaeuble stressing, “Monetary policy can’t solve the problems that have to be solved by financial and economic policy, structural policy; the ECB is doing its job well but can’t be expected to do politicians’ work.”
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