Nessa Childers, MEP for Dublin, cautiously welcomed today’s announcement from European Commission President Jean-Claude Juncker of an investment plan with an initial contribution of €21 billion in public money from the EU and the European Investment Bank, aiming to raise capital up to €315 billion.
Speaking from Strasbourg today, further to the announcement made by EU Commission President Juncker in his address to the European Parliament, Ms. Childers said:
“Although manifestly insufficient, Mr. Juncker’s announcement is an important signal of acknowledgement, by a conservative Commission president at the start of his mandate, that public investment and economic stimulus are urgently needed and necessary to turn the tide of economic stagnation.
“We find ourselves on the way to a lost decade in terms of social and economic development, since the economic crisis erupted in 2008.
“Our response to a crisis that was precipitated by global financial collapse was based on austerity, and supported by a discourse that mistook symptoms, causes and consequences.
“First, we shifted the costs of the crisis to the public purse and the taxpayers that fund it, and then we shifted the blame to the public sector and the citizens who avail of public services.
“Predictably, by applying the recipes advocated by the same kind of economic thought that brought us to disaster, we choked our recovery prospects and the imbalances between strong and weak EU countries actually increased, along with disastrous unemployment levels.
“We must do much more. No matter how ambitious, no realistic investment plan at EU level can, at present, counteract the scale, and the damage, of the combined fiscal contraction across the 28 EU Member States’ national budgets.
“We know how reluctant cash-strapped Member States are to contribute for European stimulus packages, and hence the serious concerns about Mr. Juncker’s announcement being based on recycled and diverted money from other EU programmes.
“My political group in Parliament has proposed a European Investment Instrument, to which Member States would contribute a maximum of €100 billion, to be leveraged on the market so as to reach a financial capacity of €400 bil;
“We should reinforce this with capital from European Stability Mechanism to invest in sustainable infrastructure and energy sources, but we also need the European Investment Bank to enhance its commitments. By mobilising up to €37.5 billion in EIB resources, we could reach a further €150 billion in investment firepower.
“But we must go much further beyond in the longer term. For a significant European investment programme to be more than a macro-economic bandage, we need European fiscal rules that are not a one-size-fits-all corset on economies that face different circumstances, forcing all Member States to go down a counter productive route that exacerbates negative cycles, for the sake of obeying conservative orthodoxy, irrespective of what the stark realities on the ground prove to be. Monetary and industrial policy in Europe should function likewise.”