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Debt woes, bank taxes and growth plan dominate EU summit - 18/06/2010

Mirrored facade of council building in Brussels © EU

Leaders move to restore confidence in Europe’s financial stability and reinforce economic governance.

EU leaders have decided to publicly release the results of ongoing tests on European banks to reassure markets that the bloc is financially stable despite the debt burden weighing on countries.

Commission president Jose Manuel Barroso had strongly urged EU leaders to disclose the results of the so-called stress tests, which indicate whether a bank can withstand shocks to the economy.

“This should reassure investors by either lifting unfounded suspicion or by dealing with the remaining problems that may exist,” he said. Twenty-five of Europe’s biggest banks are being checked, with results due out in the second half of July.

Leaders also agreed to crack down on governments that spend beyond their means, mulling new sanctions against rule breakers, closer scrutiny of debt levels and more oversight of each other’s economic policies.

Ahead of next week’s G20 summit in Toronto, they voiced support for taxes on financial institutions to contain risks and spare taxpayers the cost of any future bank failures. And they agreed to press world leaders to explore the possibility of a tax on financial transactions.

The decisions came at a summit in Brussels on 17 June that also saw the adoption of a plan for spurring growth over the next decade and an agreement to impose more sanctions against Iran over its nuclear programme. Iceland was given a green light to pursue its EU membership bid, while Estonia will adopt the euro next year.

The crisis wreaked havoc with public finances, with governments borrowing heavily to rescue banks and stimulate growth. Now that the economy is on the the mend, the Europe 2020 strategy seeks to shift the focus from stimulus spending to budget discipline and structural reform.

In a first for the EU, the plan requires governments to set national targets – backed by detailed plans - to help the EU achieve quantitative goals on employment, education, poverty, climate change and research and development. Performance will be monitored.

 

Europe 2020 growth strategy

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