France's push for a more growth-friendly interpretation of EU budget rules appears to have paid off.
French officials said they were satisfied with the summit conclusions, which state that "the possibilities offered by the EU's existing fiscal framework to balance productive public investment needs with fiscal discipline objectives can be exploited in the preventive arm of the Stability and Growth Pact”.
France's budget deficit will hit 3.7% of gross domestic product this year, missing the 3% target.
German Chancellor Angela Merkel was careful to avoid any ideological clash, telling reporters: "We made clear in a very consensual discussion that budget consolidation, structural reforms and growth are not in contradiction but are mutually reinforcing."
She appeared to give ground to detractors who criticised her for ignoring calls for a more growth-friendly approach to EU budget rules, saying: "We have decided on a growth pact in the summer of last year and now this growth pact has to be filled with life. The money is there but it has to reach the people, so the young people in Europe get jobs and we still do everything to become competitive and grow."
French officials told journalists that implementation of the European Growth Pact, agreed in June last year, was more important that “reinventing growth” at every new summit meeting.
France attaches special importance to the €120-billion Growth Pact agreed last June, which is largely funded by unused structural funds and European Investment bank financing. The implementation of the Pact, which will secure for France projects to the value of €12 billion, is due in June despite doubts over its effectiveness in the short term.
Italy after the elections
The situation in Italy, where fiscal consolidation and austerity have led to a political stalemate following the elections, appears to be taken in consideration by EU leaders.
“The Italian elections are an indication that we should listen to what the peoples of Europe are telling us,” a French diplomat said.
European Council President Herman Van Rompuy said leaders were “fully conscious of the debate, the mounting frustrations and even despair of people. He said the EU’s overall economic strategy had four stands: Restoring financial stability, ensuring sound public finances, urgently fighting unemployment, and reforming for long-term growth and competitiveness.
“These four strands are clear and consistent, and we need all four at the same time,” Van Rompuy said.
Mirroring statements made by French diplomats, Van Rompuy said that growth would not come for free, but rather as a result of fiscal consolidation.
“Growth and jobs are not things governments can buy or summon. It is our overriding objective, a result, for which we have to keep striving. The question is finding a good balance, setting priorities, making the right choices. That's what our discussion was about,” Van Rompuy said.
European Commission President José Manuel Barroso said he had put on the table a whole series of proposals to stimulate growth, but lamented that their implementation was “too low and too slow”.
He said he welcomed wording in summit conclusions that call for the Council and the European Parliament to move quicker to implement many of those measures. Among them, he mentioned the Compact for Growth and Jobs and the Youth Employment Initiative.
Analysts say the Youth employment initiative, worth €6 billion, is far too small to make an impact, amounting to barely €100 for each young person without a job across the 27 EU states.