Economic co-ordination to top summit agenda

Germany still against a Greek rescue package and Europe 2020 strategy also faces opposition.

EU leaders will discuss how to achieve better economic co-ordination and improve monitoring of countries’ public finances at their summit meeting in Brussels on 25-26 March. 

The meeting is likely to be dominated by discussions about a financial rescue package for Greece that would allow it to refinance its debts at more affordable interest rates. Germany is still opposed to announcing a package for Greece at the summit, but is coming under increasing pressure from its eurozone partners and the European Commission to finalise the shape of a package. Greece could draw on this aid if it risked being unable to refinance its debts.

Germany will agree to provide aid to Greece only if it gets a commitment to agree tougher rules for membership of the eurozone in future.

Economic co-ordination

Herman Van Rompuy, who is chairing his first formal summit of EU leaders as president of the European Council, wants the summit to focus on how to improve co-ordination of economic policies in future, so as to prevent such major problems building up again.

Leaders will hear from Felipe González, the former Spanish prime minister, who has looked at economic co-ordination as part of his work for a report on the future of the EU.

In a letter to EU leaders, Van Rompuy says he wants the discussions to focus on the challenge of competitiveness, saying that “insufficient attention has been given to divergences in competitiveness”.

The financial difficulties of Greece and other eurozone members such as Spain, Portugal and Italy have been blamed in part on losing competitiveness within the eurozone through excessive wage increases.

Van Rompuy is asking EU leaders whether developments in competitiveness should be assessed as part of the surveillance of member states’ budgets.

Competitiveness

Leaders will also focus on growth and competitiveness on the first evening of the summit as part of discussions on the Europe 2020 strategy. The Commission has proposed setting five targets for research and development spending, employment, education, climate change and poverty reduction. But there is opposition from several member states to the approach.

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Germany is opposed to agreeing any targets at this summit, arguing that any objectives must be agreed by its parliament and its regional governments. The education target of 40% of young people having a degree is problematic for Germany as education is the responsibility of the regions.

Some countries have opposed a target of 3% spending on research and development, while others have opposed setting a target for reducing the number of people in poverty.

EU leaders are supposed to agree national targets based on the five EU-level targets at a summit in June.

The meeting will also discuss preparations for a G20 summit in Toronto in June which will focus on financial market supervision.