Europe Needs More Investment to Boost Recovery, EU Aides Sayby
EU finance-ministry aides weigh in on budget reports
Letter says country recommendations don't lead to policy moves
Lagging investment means the European Union’s economic recovery isn’t picking up as fast as it should, the bloc’s top finance-ministry aides said in a letter to Dutch Finance Minister Jeroen Dijsselbloem.
“Investment is clearly an important area where more efforts are needed given the significant drop since the crisis both in public and private investment,” wrote Thomas Wieser, head of the Economic and Financial Committee of finance deputies, in a letter obtained by Bloomberg News. The March 1 letter says EU budget reports “point to the need for reforms to set out the right conditions” and “there is a need for further progress.”
Both public and private investment has fallen in “most” of the euro-area’s crisis-hit nations, and private investment has fallen in the nations eligible for extra EU development funds that play a “supportive role.” In the bloc’s other countries, conditions have been more resilient but the recovery isn’t as robust as expected, according to the letter.
The European Commission is officially focused on reining in government liabilities, and last month called on the euro area’s largest countries to reduce their debt loads in order to help the economy return to growth. The commission urged nations to boost jobs, make labor markets more flexible and tackle other economic vulnerabilities, while postponing fresh EU assessments of economic imbalances.
EU finance ministers will gather in Brussels next week to discuss the budget outlook alongside banking, tax and other related matters. Dijsselbloem will chair the meeting since the Netherlands holds the EU’s rotating presidency and sets the discussion agenda in the first half of 2016.
The European Commission isn’t having enough practical impact with its country-specific recommendations for shoring up national economies, Wieser wrote in the letter. It asks finance ministers to consider how the analysis can lead to better practices instead of just the next cycle of paperwork.
“How can finance ministers help ensure that some of the issues raised in the country reports translate into domestic debate and ultimately into actual policy making?” Wieser wrote.
The letter also criticized the commission for splitting its national budget reports into two parts this year. The Brussels-based commission released state-of-play reports on national economies on Feb. 26, while postponing the imbalance recommendations until March 8. The bloc hasn’t yet fined any nations for breaching its economic rules, which were tightened after the financial crisis.