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EU to commit to €200 bln stimulus plan

  European leaders are set to back a €200-billion economic stimulus pact and a climate change plan amended to ease its impact on industry and poorer EU states, a draft text showed.

 

The draft text, obtained by Reuters before a final review by EU leaders on the second day of a Brussels summit, committed the bloc to reaching a target of cutting greenhouse gas emissions by 20% by 2020, despite such concessions. However diplomats say the final shape of the climate package is still uncertain, and ecology groups fear it could emerge from the talks in a much watered-down version of its original form.

The draft approved the headline goal of an EU-wide program of measures aimed at wrenching the 27-nation bloc’s economy out of recession, despite some differences between EU member states about how to respond to the worst credit crunch in 80 years. “The plan provides a common framework for the efforts to be made by member states and by the EU with a view to ensuring consistency and maximizing effectiveness,” the draft said of measures offering temporary support to the economy, including the auto and construction sectors.

Skeptics say the plan rests largely on national stimulus plans already announced by individual governments. It includes an extra €30 billion of funding by the EU’s lending arm, the European Investment Bank, to help industry in projects such as green energy over the next two years. In wording which appeared to reflect the reluctance of countries such as Germany to cut value added tax (VAT), the text noted the possibility of reducing VAT on labor-intensive services only in those states that wished to do so.

It said recent deep rate cuts by the European Central Bank and other central banks were supporting growth and urged commercial banks to pass on those reductions to borrowers. The draft also noted that the EU planned to launch a dialogue with oil-producing countries aimed at seeking “lasting stability” in energy prices. (Reuters)