The European Commission published today (6 December) a Roadmap for deepening Europe's Economic and Monetary Union, consisting of several initiatives such as a proposal to establish a European Monetary Fund, new budgetary instruments for a stable euro area and the post of a European Minister of Economy and Finance. The roadmap builds on the Five Presidents’ Report from 2015 as well as the different reflection papers related to the EU’s future published in the first semester of this year.
SOLIDAR is following closely the developments around the proposal of an automatic stabiliser, a tool we have been advocating for a long time as this could help Member States to cope with big asymmetric shocks and thereby possibly avoid severe impacts on levels of unemployment, poverty or social exclusion.
Over the past few years, discussions have been ongoing at European level about the possibilities of establishing an automatic stabiliser at EU level to support Member States in difficulties. Of the different options mentioned in the Five Presidents Report, such as a European Unemployment Insurance System, the Commission today proposed a “European Investment Protection System”. In SOLIDAR’s understanding, this seems to be a quite complex construction consisting of different elements (e.g. loans from the EU Budget, grant support from the EU Budget, an insurance mechanism) and access to it is subject to strict eligibility criteria and trigger mechanisms.
SOLIDAR welcomes the first outline of such a mechanism as a step in the right direction towards a better absorption of shocks and the avoidance of negative spill-over effects between Member States. Until now, Member States experiencing such shocks are left to their own devices to deal with the problem and receive only little support from EU level. The rules of the Stability and Growth Pact are too strict for Member States to keep public investments into social security systems, education or health care at a decent level also during economic downturns. This can have severe impacts on levels of poverty or unemployment and therefore on the cohesion of our societies.
To SOLIDAR’s regret, the roadmap published today does not change the austerity-based narrative of structural reforms and the strict rules of the Stability and Growth Pact remain untouched.
For SOLIDAR, the pure reliance on private investment (as seems to be the underlying narrative of the Juncker Plan and the recently published Semester Package) is illusory for the simple reason that private investors have a different (narrow) view of utility. Therefore, Member States need to restart the much needed social investment in services such as education, child, health or elderly care and the EU needs to set up the framework to enable that.
Please also have a look at SOLIDAR’s publication “Progressive structural reforms. Proposals for European reforms to reduce inequalities and promote jobs, growth and social investment”