European Council outlines more hardline measures under ‘competitiveness pact’

Press Release – Party of European Socialists (PES)

Today’s European Council meeting in Bruxelles has dissolved into a fractious squabble among right wing leaders on method. However there are clear indications that on content the path identified is an ‘austerity juggernaut’ of higher retirement ages, ripping up wage agreements, and an absence of funding for vital R&D programmes.

First indications that things were not going according to plan was the extraordinary decision by French President Nicolas Sarkozy and German Chancellor Angela Merkel, to stage a lunch time press conference. They outlined their proposals for economic governance prior to the discussion with other European leaders. This pre-emptive strike to set the agenda had been opposed by all who support the so-called ‘Community Method’.

However despite divergence on method, the content of the Merkel/ Sarkozy ‘turn’ was a direct echo of Commission plans. The Commission’s Annual Growth Survey had called for more fiscal discipline, mainly through further public budget cuts, looser labour laws across the EU, and an explicit call for lower wages by aligning them with the underlying productivity.

President of the PES, Poul Nyrup Rasmussen stated that; “Chancellor Merkel and President Sarkozy may disagree with President Barroso over who should be the driver of EU decision making, but they all want to get the austerity juggernaut from A to B. This competitiveness pact is an insult to millions of Europeans working hard to get out of this crisis – yet again the burden falls on them. With the Annual Growth Survey as his instruction manual, Barroso has been reduced to a bumbling mechanic for this juggernaut”.

He continued; “How are ordinary people to be expected to make yet more sacrifices on retirement, on wages, and on social benefits, when they are yet to see any tough measures taken to control the financial sector, or even have that sector pay a fair share?”

Mr. Rasmussen outlined the PES alternatives through a ‘progressive pact for jobs and growth, which would allow for low interest rates, a more balanced European Stability Mechanism and a full commitment to establishing a system of Eurobonds’. Such a route would allow for; “an upward convergence based on solidarity rather than the right wing desire to place weaker EU countries in solitary”.

The next European Council in March is set to take decisions on the proposals held today.

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For further information please contact Brian Synnott on +32 474 98 96 75 (brian.synnott@pes.org)

The PES brings together 33 socialist, social democratic, labour and progressive parties in the European Union and Norway, a parliamentary group in the European Parliament (184 MEPs) and in the Committee of the Regions (247 members) - plus observer and associate parties and organizations from all over Europe. ECOSY and PES Women are respectively the Youth and the Women's organizations of the PES.