The EU summit - Twin-track approach is essential

Today’s informal EU summit will mark another small step along what may be a far longer road than any of us anticipate even after four years of businesses closing, job losses, pay and service cuts and almost unprecedented wealth destruction.

However, the good news is that the EU consensus towards twin programmes to help build a better future while confronting the unsustainable debt and spending habits of today is gathering momentum. At last the medicine is sweetened by the prospect of something other than a relentless fall in living standards and catastrophic unemployment rates. French President François Hollande’s determination — and big stick — to add growth elements to the fiscal treaty has given an impetus to these measures and made space for them on what was a one-track agenda.

The latest in a long series of inconclusive summits — no decisions will be taken until next month — today’s Brussels meeting will concentrate on jobs and growth to a degree that might counter the German-led, one-eyed belief in austerity as the only way of stabilising European economies and the euro.

European Council president Herman Van Rompuy set the tone in a letter to all EU leaders when he asked that they “engage in as open and frank an exchange as possible, with a view to moving ahead efficiently and constructively towards a credible package in June”.

Though that package will not be finalised before we vote on May 31 it must be assumed that the measures brought forward will address issues around growth packages and job creation.

The urgency surrounding these policies was underlined by the Organisation for Economic Co-operation and Development (OECD) yesterday when it warned that global recovery could be derailed by the euro crisis. The Paris-based organisation encouraged European leaders not to so vigorously impose austerity, warning that aggressive budget cuts to reduce debt levels would probably push euro countries into a self-perpetuating spiral of failure that could infect the global economy.

The OECD predicted that unemployment in Ireland will reach 14.5% this year but will ease very slightly to 14.4% next year. It also predicts the Irish economy will grow by 2.1% in 2013, which is lower than earlier forecasts of 2.4%.

Speaking in Limerick earlier, Finance Minister Michael Noonan underlined the threat inherent in an austerity-only approach when he said it’s not a question of either/or, it’s a question of both — “a second programme has to be run parallel across Europe”.

Though this is encouraging it does point to the very unfortunate timing of our referendum and the inflexibility imposed on the May 31 date by our Constitution. It seems possible to be reasonably certain that stimulus measures will be adopted in the June document but that is hardly good enough. The choreography of events may have been beyond our Government but unless the June document contains measures to quickly confront unemployment and the gnawing uncertainty around the euro then its credibility will be damaged, possibly to a fatal degree.

In those circumstances the future of the European project would be even more damaged.


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