Kurt Formosa
The arrival of a new European Commission, with an ambitious agenda for Jobs, Growth, Fairness and Democratic Change, is the right moment for a new start. It is urgent to restore growth across the EU and to generate a new drive for change. Recently, the European Commission published the European Union's 2015 Annual Growth Survey accompanied by the publication of the Commission proposal for the Joint Employment Report. The latter analyses the employment situation in Europe and the policy responses by member states.
The European Commission's Annual Growth Survey is the first phase of a new cycle of economic policy guidance and surveillance - the European Semester. In each European Semester, the Commission analyses the fiscal and structural reform policies of every member state by providing recommendations and monitoring their implementation.
In its 2015 Annual Growth Survey, the Commission recommends the tracking of an economic and social policy based on three main pillars focusing on boosting investment, renewing commitment to structural reforms and the pursuit of fiscal responsibility.
During this month's Meusac Core Group meeting, Prime Minister Dr Joseph Muscat met with representatives of political parties, constituted bodies and civil society in order to discuss the themes that are on the agenda of the European Council Meeting being held on 18 and 19 December. In fact, the main theme for the next European Council meeting is the EU's economic and social policy. Following the Commission's presentation of the 2015 Annual Growth Survey, the European Council is looking at further efforts to foster growth, jobs and European competitiveness and, where appropriate, set new orientations.
The Prime Minister said that the Survey is accompanied by the Alert Mechanism Report (AMR), which is part of the regular surveillance under the Macroeconomic Imbalances Procedure, and aims to identify and address imbalances that may hinder the performance of national economies, the euro area, or the EU as a whole. Dr Muscat said that reports are positive about government's policies, particularly in relation to the macro-economic imbalances, with the European Commission deciding that Malta will no longer undergo regular assessment. The Commission finds that further analyses are warranted to examine in detail the accumulation and unwinding of imbalances and their related risks in 16 member states which include Belgium, Bulgaria, Germany, Ireland, Spain, France, Croatia and Italy.
In this context, the European Council is also discussing in particular the Commission's initiative mobilising €315bn of investment over the period 2015-2017 which was proposed as part of this survey. Indeed, this does complement the new Commission's ambitious agenda for Jobs, Growth, Fairness and Democratic Change. This is part of the European Commission's overall approach to support job creation and maintain Europe in its path to economic recovery. The European Investment Plan is focusing on mobilising investment finance without creating new debt, supporting projects and investments in key areas such as infrastructure, education, research and innovation, and removing sector-specific and other financial and non-financial barriers to investment.
During Meusac's Core Group meeting, several members raised a number of points with regard to the European Investment Plan. It was pointed out that the projected outcomes may be inflated and that broad consultation should be carried out on projects proposed for Malta. The Prime Minister, in his reaction to the remarks by members, said that government is in favour of the Investment Plan, however, there are concerns about whether there will be new sources of investment or whether the plan will avail of other sources of unutilised funds.
Further deepening of the single market and avoiding burdensome regulations is required at EU level; particularly for small- and medium-sized enterprises (SMEs), enhancing access to finance and ensuring the quality of investment in research and innovation. Moreover, efforts at member state level have to be complemented by the implementation of structural reforms of product, services and labour markets. In fact, reference was made by the Core Group members in relation to access of EU funds for SMEs, the importance of the involvement of the private sector in government projects and the prioritisation of research and innovation, especially in the manufacturing sector. The Prime Minister referred to the success of the Jeremie programme (the Joint European Resources for Micro to Medium Enterprises), which is an initiative of the European Commission developed together with the European Investment Fund that promotes the use of financial engineering instruments to improve access to finance for SMEs via Structural Funds interventions. Dr Muscat stated that Malta is showcased as a success story for the programme.
During the Core Group meeting, the Prime Minister also emphasised how Malta is in favour of budgetary discipline and flexibility and against leniency and rigidity. For instance, Malta is in favour of rules against money laundering and tax evasion. However, the Maltese government along with some other European countries will continue to maintain a strong position in favour of keeping taxation systems within the remit of the national authorities of the member states.
According to the vice-president of the Commission Valdis Dombrovskis, responsible for the Euro and Social Dialogue, this strategy proposal based on investment, structural reforms and fiscal responsibility is a call for urgent action involving governments, parliaments and social partners at EU level and in each member state. Nonetheless, acting together now on such a proposal can avoid the risk of prolonged low economic growth and spur sustainable growth and expectantly EU citizens have more employment opportunities.
Kurt Formosa isHead on EU Policy & Legislation - Meusac