PES Prime Ministers’ and Leaders’ Political Statement  on the eve of the European Council 17 June 2010

The European Union has, over the last six months, undergone a sustained period of crisis. Under Conservative direction, there has been a misguided response, largely based on public budget cuts and austerity measures that threaten long term recovery, employment and social cohesion. It is an attempt to ‘strangle our way back to good economic health’. It will not work. Indeed, when austerity measures begin also to be implemented by countries in good economic health, one must ask if these measures are nothing less than a conservative assault on the welfare state. 

Having practically all EU member states simultaneously implementing austerity measures, is simply a guarantee for a slump in growth and a return to recession. It will lead to an extra 4.5 million job lost by 2013. Europe is the only major trading area pursuing an imbalanced ‘austerity only’ approach.    

There is another way. The Party of European Socialists (PES) proposes a more balanced approach. Our way would result in a more effective consolidation of public finances than the ideologically driven conservative approach. Our approach prioritizes job creation, which is the most important indicator of recovery and sustainable growth. It is an approach based on recognizing the need for budget consolidation, but also the role of public investment. 

Unemployment in Europe is heading for the 25 million mark. The EU is at risk of losing a generation of young people to long-term unemployment. As a consequence, European society is at risk of losing this generation to political apathy or, worse, to political extremism. 

The European Council has the opportunity to take far reaching decisions on economic governance, financial regulation and climate change. It also has an opportunity to make poverty reduction, social inclusion and decent work a central pillar of the EU’s long-term strategy. It is unclear if the Conservative dominated Council has the political courage to make real progress on any of these subjects.

Political leaders in Europe must illustrate that they can react to crisis in ways that actually create more job opportunities, as have been done in other parts of the world also hit by the global financial crisis. It is time to revitalise the European decision-making process. It is time for the European Union Governments to develop a real economic union, to rediscover solidarity and to identify a collective way out of the crisis.

The PES, supported by the hard work of the Spanish EU Presidency, has a proven track record on concrete actions for the Euro-zone crisis. The PES has first identified and promoted the Financial Transaction Tax and a bank levy as new sources for much needed tax revenue, but also a balanced and fair measure to make those that caused the crisis contribute to its handling. The PES also was first to call for the European Financial Stability Facility and the emergency stability mechanism. 

We, PES leaders, also believe that there is a need for budget consolidation. But it must be combined with economic recovery and structural reform. Both  revenue measures and expenditure measures need to be socially balanced. In particular, cuts in welfare systems, with its dire consequences on social cohesion and gender equality should be avoided. What we need is an alternative way, in which a tax on financial transactions and a bank levy play a complementary and central part. In this context, a collective European debt mechanism, otherwise known as “Eurobonds”, should also be put on the political agenda.  

The European Union now needs to move from crisis management to long term recovery and sustainable development. On the basis of the declarations on a Progressive Way out of the Crisis and on priorities for the Europe 2020 Strategy, as adopted by the PES Presidency and the Group in the European Parliament, and the annexed PES policy paper, we, the Prime Ministers and Leaders of the PES, call for: 

- a coordinated economic policy that recognises that the EU is a single trading area, not a disparate collection of competing member states; 

- a long-term ‘Europe 2020’ strategy that puts social justice, poverty reduction, green growth and jobs at the centre, reinforcing a sustainable way out of the crisis;

- effective and urgent financial regulation, including strengthening European supervisory authorities; more transparent and tighter control of derivatives products and speculative actors, such as hedge funds and private equity; regulating private rating agencies; and the creation of a European independent rating agency; 

- a clear response to the EU sovereign debt crisis, in which a system of Eurobonds, , managed by a European debt agency, for handling existing debt, facilitating future debt management and protecting against speculative attacks, should be seriously explored. This could provide relief to national budgets and be combined with clear political conditionalities to ensure sound economic and sustainable growth. Furthermore, the capacity for the EU to issue Eurobonds could fund investment projects managed at the European level; 

- a European Employment and Social Progress Pact, including concrete measures to create new, decent jobs; promote active labour market policies; increase quality of work; fight precarious jobs; overcome social inequalities such as the gender pay gap; and improve the quality of and access to public services. 

Ordinary people did not cause this crisis. Condemning people to unemployment is unjust. Putting people back to work is the true path out of the crisis. Let’s defend our welfare states. Alone, no country can defend itself against speculative attacks. By acting together we guarantee our strength. To the people of Europe, the Party of European Socialists says; ‘Let’s get Europe Working Again’.