EU mulls 200 bn euro stimulus package amid reservations

EU mulls 200 bn euro stimulus package amid reservations
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First Published: Mon, Dec 01 2008. 06 13 PM IST
Updated: Mon, Dec 01 2008. 06 13 PM IST
Brussels: European finance ministers get their first chance on Monday and Tuesday to discuss EU plans for a €200 billion stimulus package in the face of stiff German reservations.
With the spectre of recession looming large, the European Commission called last week for a big boost to public investment and social spending across Europe while giving embattled consumers a range of tax breaks.
Finance ministers from the 15 nations sharing the euro were to discuss their contributions to the overall plan on Monday evening in Brussels, to be followed by their counterparts from the full 27-nation EU on Tuesday.
While the commission’s overall proposed packaged would be worth about €200 billion ($253 billion) or 1.5% of the 27-nation European Union’s output, Germany and some other countries balked at the idea of pumping so much money into the economy.
A senior EU diplomat said that the ministers would be discussing: “should we set such a high number or not?”
The European Commission aims to secure backing for the package from EU heads of state and government when they meet in Brussels at a 11 - 12 December summit.
However, not all countries are in favour of such a package with Germany, Europe’s biggest economy, preferring to stick to its own plans for reviving its economy.
German Finance Minister Peer Steinbrueck has dismissed the package as “ineffective populist measures” and has said Berlin does not have to go along with the idea of spending more to ease the crisis just because other countries are doing so.
“The Germans do not have to accept a European proposal where we do not understand what could be the economic impact,” Steinbrueck told the weekly newsmagazine Der Spiegel.
Berlin had already shown a “strong response” to the global financial crisis, he said, having earlier this month committed around €31 billion over two years to support the German economy, which official figures showed fell into recession in the third quarter.
Poland and the Czech Republic, which takes over the EU’s rotating presidency from France in January, have also sounded misgivings about the plans.
Some economists also have their doubts about the EU plan, noting that €130 billion would come from national plans in Germany, France, Britain and Italy and the rest from EU funding.
Also, some of the national measures would do little against recession in the short-term, economists have said, pointing to Germany’s package which would be spread over four years and Italy’s plans which include bank recapitalisations.
Meanwhile, French President Nicolas Sarkozy has announced he will present on Thursday a “very strong” economic plan for France. He gave no details but said it would include measures for the energy sector which he characterised as a “reservoir” of jobs.
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First Published: Mon, Dec 01 2008. 06 13 PM IST