Fighting fire with a cup of water - EMU programmes don’t have the means to be a credible fiscal capacity, says JEF Europe

The European Commission published today a set of sectoral budget proposals outlining the financing for the Economic and Monetary Union programmes, including a Reform Support programme  and a European Investment Stabilisation Function.

“As Young European Federalists [JEF Europe] we welcome this initiative to deepen the European Monetary Union. Unfortunately it is also clear that the timid proposals on the table will neither be able substantially to smoothen economic shocks in parts of the monetary union nor will they provide adequate financial support for difficult reforms that often only pay-off in the long run. The economic and monetary union is in dire need of a credible fiscal capacity at the Union level. Today’s proposals go in the right direction, but the Commission seems to suggest fighting a fire with a cup of water. In the absence of any Franco-German proposal, the Young European Federalists would have been delighted to see a more courageous approach from the Commission.”, comments Christopher Glück, President of JEF Europe.

European Investment Stabilisation Function

The Investment Stabilisation Function can contribute to ensuring that investment levels are maintained in case of asymmetric shocks, and thereby contribute to sustaining long-term growth perspectives. This is a sensible tool to be financed through the European budget, but constitutes only a small step in the right direction. Any meaningful macroeconomic stabilisation function requires specific and adequately funded instruments of a size of at least 1% GDP and  must have direct economic effect. JEF Europe has long supported the idea of a European unemployment insurance scheme to support cyclical growth and ensure that not only long term investment is protected but short term growth is not hindered in case of crisis.

‘‘As the events in Italy show, the window of opportunity is already closing. It is time European leaders cease with the “business as usual” attitude of recent years and bring on radical reforms for Europe. The Eurozone is not prepared to withstand another storm and adding one small supporting pillar will not make up for a faulty architecture.”, adds Christopher Glück.

Reform Support programme

The reform support programme can be an important tool in the future EMU architecture, both for the effectiveness of the European Semester process and to accelerate convergence of Member States that are still to adopt the Euro as their currency. Properly designed and funded, it will also improve the functioning of the internal market as a whole. For the programme to deliver on its objectives, however,, a much larger budget would be required,  which shouldn’t be financed at the expense of regional and cohesion funds that support infrastructural projects in disadvantaged regions of Europe and support the convergence of living standards.

More information on JEF Europe

The Young European Federalists (JEF) Europe is a non-partisan youth NGO with 13.000  members active in more than 35 countries. The organisation strives towards a federal Europe based on the principles of democracy and subsidiarity as well as respect for human rights. JEF promotes true European Citizenship, and works towards more active participation of young people in democratic life. While the umbrella organisation JEF Europe was founded in 1972, its sections have been operating continuously since the end of the Second World War, making it the oldest pro-European and only federalist youth organisation.


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