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Economic recovery plan in the works - 30/10/2008

President Barroso and economy commissioner Almunia at press conference after commision meeting on financial crisis © EC

Commission previews comprehensive plans to tackle financial crisis as EU leaders gear up for international summit.

The top priority is to cushion the impact of the financial crisis on jobs, purchasing power and prosperity of EU citizens. That was from president Barroso, speaking after an emergency meeting of the commissioners to map out a strategy .

The plan, due out on 26 November, will include short-term measures to help head off a recession. The commission is looking at new funding and new uses for existing funds. It also wants to increase capital available for the European investment bank, the EU’s long-term lending institution. The bank has already put together a €30bn loan package to help small businesses struggling to get financing.

Acknowledging that national governments set fiscal policy, Mr Barroso stressed the need for coordination at EU level. “We must swim together or we will sink together,” he said. The plan will seek to improve regulation and supervision of the EU financial sector.

The EU is extending €6.5bn in emergency credit to Hungary, which has been hit hard by the crisis. The commission is also expanding its crisis fund to help other countries in distress.

A number of countries have expressed concern about the costs of the EU’s plan for a 20% cut in greenhouse gas emissions by 2020 (compared with 1990 levels), especially in the light of the financial crisis. Mr Barroso said the EU must speed up, not slow down, its climate change agenda. Greening the economy will provide new opportunities for growth. Measures might include funding for transport, energy and high technology, and tax cuts to increase demand for energy-efficient goods and services.

EU leaders are meeting next week to prepare for an international summit on the financial crisis that will take place on 15 November in Washington. The summit will aim to improve coordination between countries and discuss how to avoid a repeat of the crisis. Mr Barroso reaffirmed the EU’s support for an overhaul of the world financial system with tighter regulation and more global oversight.

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