The EU response to tackle the financial turmoil and the economic slowdown

 

52. During 2009, the EU economic recovery plan started to come into effect. Its priorities were restoring business and consumer confidence, kick-starting lending and investments, and supporting and creating jobs. Central to the plan was the ability of the EU to catalyse cooperation. The EU could exert its influence because it was able to harness Member States' and Union action, using the strengths of each part of Europe to best effect. This allowed the EU to help in shaping the global response to the crisis. The recovery plan is a response to the crisis with a clear eye to the future. It called for investments to improve the EU's competitiveness, not just to rebound from the crisis but to foster economic growth.

53. To counter the threats to the international trading system, the EU invested heavily and successfully in influencing the London G20 pledges, when world leaders agreed to base their trade policy on WTO rules and disciplines and the prospect of further liberalisation offered by the Doha Development Agenda.

54. The EU also took a leading role in promoting international responses to the crisis. It was prominent in discussions within the G20 as the premier forum for international economic cooperation. The EU argued for global efforts to fill in the gaps in financial regulation and supervision at international level. It took a leading role in promoting new rules on bank capital. It kept up pressure for effective action to plug deficits and reduce debt while stimulating growth prospects. The EU proactively supported a commitment at the G20 summit in November 2010 in Seoul to fight protectionism in all its forms and to promote joint action to boost global growth and jobs. A "Seoul action plan" commits the G20 further to global action for balanced growth, and is a clear recognition of joint responsibility under which all major economies have agreed to do their part to achieve rebalancing to tackle imbalances. The EU also helped to build a consensus on cooperative solutions to tensions on currency issues and trade. Leaders agreed to move to more market based exchange rates and enhance exchange rate flexibility to reflect underlying economic fundamentals and refrain from competitive devaluations — as EU leaders had called for in advance of the summit. By endorsing the Basel III reform, the G20 also kept up the momentum for global financial regulatory reform, a key priority for the EU.

55. In September 2010 the Commission delivered a comprehensive package of legislative measures to reinforce economic governance in the EU and the euro area. It aims at broader and enhanced surveillance of fiscal policies, as well as of macroeconomic policies and structural reforms. It also provides new enforcement mechanisms for non-compliant Member States. Four of the six proposals deal with fiscal issues, including a wide-ranging reform of the Stability and Growth Pact, so that sanctions will be the normal consequence for countries in breach of their commitments. Two other regulations aim at detecting and addressing emerging macroeconomic imbalances within the EU and the euro area.

56. In October 2010, the European Council agreed that Member States should establish a permanent mechanism for crisis resolution to safeguard the financial stability of the euro area as a whole. At the December 2010 European Council, it was agreed that the treaty will be amended to allow for the creation of the European Stability Mechanism (ESM). It will be activated by mutual agreement of the euro-area Member States in situations where the stability of the euro area as a whole is at risk.

57. As regards the measures to tackle social dimension of the crisis, changes have been made as regards support from the European Social Fund (ESF)[18] to help people stay in job or to look for a new one and also changes have been introduced into the Regulation (EC) No. 1927/2006 on the European Global Adjustment Fund (EGF)[19] aiming to help workers recently made redundant get back to work.