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On 26 November 2008 the European Commission presented a comprehensive plan to drive Europe's recovery from the current economic crisis.
The Recovery Plan is based on two mutually reinforcing main elements. Firstly, short-term measures to boost demand, save jobs and help restore confidence. Secondly, "smart investment" to yield higher growth and sustainable prosperity in the longer-term. The Plan calls for a timely, targeted and temporary fiscal stimulus of around €200 billion or 1.5% of EU GDP, within both national budgets (around €170 billion, 1.2% of GDP) and EU and European Investment Bank budgets (around €30 billion, 0.3% of GDP). Every Member State is called upon to take major measures good for its own citizens and good for the rest of Europe. The Recovery Plan will reinforce and accelerate reforms already underway under the Lisbon Growth and Jobs Strategy. It includes extensive action at national and EU level to help households and industry and concentrate support on the most vulnerable. It puts forward concrete steps to promote entrepreneurship, research and innovation, including in the car and construction industries. The Recovery Plan aims to boost efforts to tackle climate change while creating much-needed jobs at the same time, through for example strategic investment in energy efficient buildings and technologies.
Commission President José Manuel Barroso said: "The Recovery Plan can keep millions in work in the short-term. It can turn the crisis into an opportunity to create clean growth and more and better jobs in the future. The timely, targeted and temporary fiscal stimulus will help put our economy back on track, within the Stability and Growth Pact. Smart investments in tomorrow's skills and technologies will accelerate Europe's drive under the Lisbon Growth and Jobs Strategy to become a dynamic low-carbon economy for the 21st century. If Europe acts decisively to implement this Recovery Plan, we can get back on a path of sustainable growth and pay back short-term government borrowing. If we do not act now, we risk a vicious recessionary cycle of falling purchasing power and tax revenues, rising unemployment and ever wider budget deficits."
The top priority is to protect Europe's citizens from the worst effects of the financial crisis. They are the first to be hit whether as workers, households, or as entrepreneurs.
The Commission is proposing to simplify criteria for European Social Fund Support, re-programme spending and step up advance payments from early 2009, so that Member States have earlier access to up to €1.8 billion in order to reinforce active labour market policies, refocus support on the most vulnerable, step up action to boost skills and where necessary opt for full Community financing of projects during this period.
Up to €4.5 million of cohesion funding will also be brought forward, alongside other measures to accelerate the implementation of major investment projects and this too will contribute to protecting and creating jobs.
The European Globalisation Adjustment Fund (EGF) will be reviewed to allow it to act quicker and its scope expanded so it can keep people in jobs as well help people to find new ones. The EGF budget will also be reviewed.
To create demand for labour the Plan invites Member States to consider reducing employers' social charges on lower incomes and calls on the Council to adopt, before the 2009 Spring European Council, the proposed Directive to make permanent reduced VAT rates for labour-intensive services.