EU Leaders Struggling With Economic Growth to Turn to Tax PolicyPatrick Donahue
European Union leaders struggling to find a consensus on how to overcome the debt crisis and revive economic growth will use a summit meeting this week to focus on fighting tax evasion and on the bloc’s energy policy.
The leaders of the 27-member bloc will meet in Brussels May 22 to agree on a plan governing how EU countries share tax data after finance ministers last week failed to reach a decision. They’ll also examine energy costs and investment, as the euro-area economy continues to be in a recession.
“In the current economic context we must mobilize all our policies in support of competitiveness, jobs and growth,” the group said in a May 17 draft of their conclusions.
As receding borrowing costs wrested the single currency from the threat of collapse, the euro area’s economy extended a recession to a record sixth quarter. German Chancellor Angela Merkel and French President Francois Hollande have championed competing views on how to jump-start growth, including the scale of the bloc’s austerity measures.
The euro fell 1.2 percent last week against the dollar, retreating to $1.2839 on May 17, as gross domestic product in the 17-nation bloc fell 0.2 percent in the first quarter, more than economists had forecast.
The agenda for this week will include stepping up the fight against tax evasion after finance ministers from Luxembourg and Austria last week blocked efforts to reach agreement on sharing tax data. The accord aims to set standards for how countries collect data on income residents earn in other nations.
“Priority will be given to efforts to extend the automatic exchange of information at the EU and global levels,” according to the draft.
The renewed rules will require member states to participate in information exchanges after a transition period. The original accord, passed in 2005, offered Austria and Luxembourg an exemption from automatic information exchange requirements. Those nations now have agreed to revise their policies.
Leaders will also call for attention to “the supply of affordable and sustainable energy” and its effect on EU economies. They will pledge to study energy prices, revisit state aid rules for energy investments and investigate ways to boost financing for energy-efficient projects, according to the draft.
The region’s economic slowdown has reached the euro area’s core, with the German economy expanding less than forecast in the three months through March, France slipping into a recession and Italian GDP contracting more than forecast. The European Central Bank cut its benchmark interest rate to a record low of 0.5 percent this month as its president, Mario Draghi, said the central bank is ready to act again if needed.
This month’s summit will foreshadow a June meeting of leaders to tackle the bloc’s economy and the debt crisis. As Germany and France team up to work on a plan for youth unemployment, the two governments have struggled to resolve differences over the scale of debt-fighting polices.
Merkel and Hollande’s governments won’t issue a joint paper ahead of the June summit as they had previously done because the gap between the two remains too wide, Der Spiegel reported, without saying where it obtained the information.