Commission tables 200 billion euro ‘recovery plan’

In Germany, where Chancellor Merkel is under pressure to do more to restart the economy, a government spokesperson reaffirmed that the country's existing €32 billion stimulus plan would be enough as a contribution. "We assume the current package will be sufficient," Thomas Steg said, according to Reuters.

The EPP-ED, the centre-right group in the European Parliament, welcomed the EU recovery plan for proposing "the right toolbox to tackle the current economic crisis".

"For my group, the priority must be to protect Europe's citizens from the worst effects of the financial crisis," said Joseph Daul MEP, chairman of the EPP-ED Group. "Sacrifices cannot be avoided but, together with President Sarkozy and Chancellor Angela Merkel, our group believes that governments have to head off a recessionary spiral."

In particular, the EPP-ED "welcomes the fact that the Commission has based its response on the priorities of the Lisbon Strategy for growth and jobs". "We agree with the Commission's position that a budgetary stimulus should be provided, but not without structural reforms in the member states who should take measures to boost their economies without increasing their deficits. This is why we favour the idea of euro-bonds," Daul said.

Poul Nyrup Rasmussen, president of the Party of European Socialists (PES) welcomed the Commission's recovery plan, saying the EU executive had "listened to us and is going in the right direction".

However, he added that the plan had "two big flaws". "The first is that 1.5% of GDP in two years is almost certainly not enough to keep down unemployment. Our calculations are that you need at least 1% of GDP every year for three years to keep unemployment at current levels. The second is that [German Chancellor] Angela Merkel and other conservative leaders such as [Italy's Silvio] Berlusconi may well water down the plan and refuse to make the necessary national investments."

ALDE, the liberal group in the European Parliament, said it was "pleased" that the European Commission reaffirmed the principles of budgetary discipline in its recovery plan and applauded efforts to fight the recession with "green investments and green growth". However, it urged the Commission to "resist unnecessary subsidies for industry" and "not to allow the temptation to return to the past".

John Purvis, a UK Conservative MEP who is vice-president of the European Parliament's economic and monetary affairs committee, said the EU plan was "the wrong answer for Britain, which already has exceptionally poor public finances".

"The European Commission seems more eager to be seen to do something, rather than actually helping solve the immediate concerns of families and small businesses," Purvis said. "I am sorry to hear the European Commission suggesting that Britain's example should be followed by others."

BusinessEurope, the EU employers' association, welcomed the Commission’s recovery plan but questioned whether it would be enough. The business group called for "a clear commitment by member states to deliver economic stimulus measures amounting to at least 1.2% of their national GDP in 2009". In a veiled reference to Germany, it added that the effort could be "more for those which are able to do so".

UEAPME, the European SME employers' organisation, welcomed the recovery plan as "a strong signal" of the Commission's commitment to tackling the crisis and urged member states to back it. The SME organisation said it "particularly appreciated" the proposed additional measures to secure access to finance for SMEs, as well as proposals to "speed up the reduction of VAT rates for labour intensive services and to cut labour taxes at the low end of the wage scale".

However, UEAPME was "less satisfied" with the social chapter of the plan, saying it "does not mention the consequences of downsizing in large enterprises for smaller service providers, suppliers and subcontractors".

SME Union, an organisation representing small businesses for the centre-right European People's Party (EPP), said the EU recovery plan was "a first step in the right direction," welcoming in particular a decision to support small and medium-sized enterprises. 

SME Union President Christoph Leitl called on the European Commission to "speed up its state aid decision-making process" as EU member states will enjoy "a temporary flexibilisation of state aid legislation" under the recovery plan. "The European Investment Bank (EIB) package of 30 billion euro for global loans to SMEs has to be in the pockets of SMEs as soon as possible and the Commission has to help the Member States to make this rapidly possible," Leitl demanded.

Meanwhile, Oxfam, the international development organisation, called on EU leaders "not to forget about poor people in developing countries who are most vulnerable to shocks". "Poor people are already suffering from the impact of higher fuel and food prices," said Elise Ford, acting head of Oxfam's EU office. "EU leaders must unite in a commitment to ensure that overseas aid is not cut in the downturn."

The European Anti-Poverty Network (EAPN) said the recovery plan contained "useful measures which could address the needs of people in poverty or furthest from the labour market". However, the network believes that "without a comprehensive pillar focused on social justice and investment in people, the measures aimed at addressing people in poverty such as increasing benefit schemes are likely to get lost".

EAPN Director Fintan Farrell said the economic recovery plan "assumes that all that is needed are extra measures and more business as usual and that the current crisis is only a temporary blip in a sound economic model".  Instead, he claims the EAPN wants to see a coherent strategy "centered on the rights of people - not just businesses and banks, adding that "we want an open debate on the causes and consequences of crisis so that we can turn this crisis into an opportunity to avoid the mistakes of the past and build a new social and sustainable EU".