Barroso seeks backing for bold economic reforms

Commission president says EU has withstood test.

In a speech to the European Parliament setting out his priorities for the coming year, José Manuel Barroso, the president of the European Commission, called on EU member states to back an ambitious agenda of economic reform.

In what he billed as his first ‘State of the Union’ address to the Parliament, Barroso said that the EU had been tested by the economic and financial crisis of the last year but had “withstood the test”. “Those who predicted the demise of the European Union were proved wrong,” he said, saying that the European institutions and the member states had “demonstrated leadership”.

Speaking to the Parliament plenary session in Strasbourg on Tuesday (7 September), the Commission president told MEPs that the next year was “Europe’s moment of truth”. “We either swim together or sink separately,” Barroso said. “We will only succeed if, whether acting nationally, regionally or locally, we think European.”

Economic recovery

He said that the recovery was “gathering pace”, with growth forecast to be slightly higher than previously expected while unemployment has stopped increasing.

But he warned member states not to be complacent, urging them to carry out bold structural reforms to ensure sustainable economic growth. “Now is the time to modernise our social market economy so it can compete globally,” he said.

Barroso outlined some initiatives for the autumn, including a new single market act, proposals for taxes on financial activities and finding an extra €1 billion for the United Nations’ Millennium Development Goals.

Reform support

Fact File

Changes to the EU’s budget cycle

Barroso called for a change to the EU’s budget cycle. He said the seven-year budget cycle should be replaced by a ten-year cycle, divided by a mid-term review. He said a “five-plus-five option” would allow a review that would be in line with the five-year mandates of the Commission and the Parliament.

He called for “an ambitious post-2013” EU budget that would be able to fund policy priorities. He said a review of the 2007-13 EU spending programme would launch a debate “without taboos” to prepare for the next programme, which starts in 2014 and will be negotiated by member states and the Parliament next year.

He said the Commission would look at finding new sources of financing to help big infrastructure projects across Europe, such as roads and bridges. He said he would propose setting up EU project bonds together with the European Investment Bank, which would help pay for the construction projects.

The Commission president argued that the EU needed to address the way it financed its budget. “The current system is stretched to its limits [and] propped up by a Byzantine set of corrections,” he said. Member states have already criticised suggestions that the EU should have its own tax to fund the budget. 

Barroso’s priorities

Dealing with the economic crisis and governance: debt reduction, better surveillance, monitoring and enforcement of the stability and growth pact.

Restoring growth for jobs by accelerating the Europe 2020 reform agenda: getting more people into jobs, boosting the competitiveness of companies and deepening the single market.

Building an area of freedom, justice and security: implementing the Stockholm action plan, cracking down on exploitation of illegal immigrants and tackling threats of organised crime and terrorism.

Launching negotiations for a modern EU budget: pooling spending to cut costs and improve the return on investment.

Getting the EU to punch its weight on the global stage: in relations with strategic partners, establish a common agenda with a clearly defined European interest.

The president said that the EU’s fragile economic recovery was starting to gain traction but would need the support of renewed legislative efforts to sustain it. He promised to come forward with proposals in the autumn for taxes on financial activities, although the idea is likely to face opposition from a large number of member states. The tax plan is part of a series of economic and financial legislative measures that Barroso promised MEPs in the coming months. These, he said, would help stabilise the euro and strengthen the EU’s financial sector.

A detailed legislative plan outlining his priorities is to be submitted to the Parliament in October.

Roma

Barroso also addressed the plight of Europe’s Roma population and received a round of applause for calling on EU governments and citizens to “respect human rights, including those of minorities”, adding that racism and xenophobia had “no place in Europe”. He called on EU governments to act “with responsibility” when a problem arises. “I make a strong appeal not to re-awaken the ghost of Europe’s past,” he said.

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