The EU is at a crossroads. As its citizens face the worst crisis since the great depression of the 1930s, conservatives leading the EU insist on following an austerity-only path that has been proved wrong time and again.
Division VS Common path for the EU
EU leaders delay a decisive action capable of getting Europe out of the crisis. Instead of a strong and structured plan to work as a whole EU, conservatives’ proposals seek to create an unacceptable division among stronger and more vulnerable EU members. Instead of promoting an open decision-making progress, conservatives naturally accept that Germany and France - Merkel and Sarkozy – coordinate EU decisions and finally impose their will.
There is another way. The PES proposes a progressive way out of the crisis, to be applied without further delays:
Economic governance
The measures outlined so far in the economic governance package focus mostly on bringing national deficits down, with no regards to growth and jobs. While there is a need to keep national budgets under control, this cannot be the only objective of economic policy. Other than the fact that austerity measures tend to aggravate economic downturns, the EU cannot neglect the need to create jobs and spur growth to tackle the crisis. There should be a policy of investment in key sectors that can create new jobs and pave the way to a sustainable growth.
Rescue mechanism
The PES has long defended that the European financial stability facility and mechanism should be allowed to intervene directly on the market and purchase sovereign bonds. These instruments must be backed by strong collective guarantees that can dissipate the fear effect markets use to play against States.
Eurobonds
With eurobonds in place, countries would be able to issue sovereign bonds with the backing of the EU up to 60% of their GDP. This would mean that countries would be able to finance themselves at reasonable interest rates, for at least part of their debt. Above a given threshold, most countries would pay their own individual interest rate, without the guarantee of the EU.
Eurobonds could then work as an incentive to keep debt below the agreed threshold as well as to help countries financing key economic sectors.