Global Biz
Spain seeks new EU economy strategy
(Agencies)
Updated: 2010-01-08 11:18
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MADRID: Spain urged European Union nations Thursday to set their sights high with a new decade-long program of economic reforms and investments aimed at making the EU the world's most competitive economy by 2020 -- a goal the EU initially set for this year.
European officials are alarmed the recent recession may have permanently damaged the European economy's ability to expand, miring the region in years of low growth and high unemployment.
Days after taking the helm of the European Union, Spain called for EU countries to do far more to coordinate their economic policies and have the EU's executive commission monitor their performance.
"Our major objective ... is to produce a qualitative leap forward in our economic union," Spanish Prime Minister Jose Luis Rodriguez Zapatero told about 30 journalists from across the EU.
He said just as the European Commission can call the EU nations that have the euro as their currency to order if it finds their monetary policies too lax, it should also oversee their economic policies and impose corrective action, if needed.
In the view of Spain's socialist government, the plan for a new 2010-2020 recovery and spending program would surpass earlier, unsuccessful efforts to get EU nations to work in union, which set targets for what EU nations were doing to increase labor participation, boost new businesses and invest more in research and development.
Spanish officials claimed such a strategy will work this time because EU governments have learned from the current economic crisis.
Zapatero did not name the country but driving his plea for more oversight appeared to be the recent calamitous events in Greece whose runaway debt shows how few tools the EU has to rein in member countries that don't follow the best practice that the European Commission advocates.
After doing little to follow EU recommendations to reduce debt and deficit in recent years, the Greek government only moved swiftly to take tough action after a sharper warning from debt markets when the cost of Greek government borrowing soared.
The EU leaders will meet February 11 in Brussels to discuss the Spanish plan. Spain leads all EU talks because it holds the six-month presidency of the bloc.
Zapatero said he wants the EU leaders to debate how they can align their economic policies better. He said key candidates for a more coherent and uniform treatment were the energy and digital sectors.
"We believe that as far as economic policies are concerned we need to make these more effective," said Zapatero.
Separately, the EU's new president Herman Van Rompuy warned in a speech that the "long-term outlook is not bright" and that an expected average growth rate of under 1 percent of gross domestic product a year for the EU "is not enough."
"We will have to achieve an annual growth of at least 2 percent if we want to keep up with the rest of the world and with our self image," he said.
At the worst, he said tight lending and higher risk aversion could lower business investment on a permanent basis _ and high unemployment could become lasting, loading governments with heavy welfare payments on top of the costly burden of rescuing their economies from the crisis.
Van Rompuy called for an innovation-driven economy and "raising the quantity and quality of the labor force" as older workers retire _ and offering more education for people of all ages.
He warned of the risks of the rapid decline of industrial activity in Britain, Italy, Belgium and the Netherlands, saying it was not clear when or if every closed factory would be replaced by a more innovative firm.
