EU LEADERS have agreed a €5 billion economic stimulus package which will provide more than €100 million EU funding for Irish infrastructure projects.
They are also considering a proposal from the European Commission to raise an extra €25 billion to help EU states that get into financial trouble during the current crisis.
At an EU summit in Brussels last night they signed off on the package, which aims to boost Europe’s flagging economy and increase its security of energy supplies.
“I think we have reached a compromise that everyone can subscribe too,” said Czech prime minister Mirek Topolanek, who as holder of the six-month rotating EU presidency chaired the discussions by European leaders on the €5 billion stimulus package.
Berlin, which has led trenchant opposition to the stimulus package proposed by the commission last December, finally relented when it received guarantees that infrastructure projects not ready to begin in 2009 or 2010 cannot access the EU funds.
The plan, which is dwarfed by member states’ own stimulus efforts that run to €400 million, is financed from unused funds in the EU budget. It includes spending on energy, telecoms and farming projects that can provide an immediate stimulus to the economy.
The list of projects earmarked for funds was amended yesterday to meet the concerns of some EU states, who felt they did not get enough funding for their proposed projects.
The new list proposes to increase the amount of funding for an electricity interconnector between Ireland and Britain to €110 million, up from €100 million. Some €165 million is also available for wind power projects in eight countries, including Ireland. There is also more than €1 billion earmarked for broadband networks and farming projects that are related to the recent health check of the common agricultural policy.
Minister for Foreign Affairs Micheál Martin welcomed the stimulus package and the financial support it would provide for a proposed interconnector between Ireland and Britain.
Commission president Jose Manuel Barroso said last night he was proposing to increase the ceiling on an emergency fund used to support EU states who are not members of the euro zone to €50 billion, up from €25 billion. The existing fund has already been tapped by Hungary and Latvia, who have received €10 billion. Romania has also made an application to access the fund in the face of the economic and financial crisis. A final decision on whether to recapitalise this so-called “balance of payments fund” will be taken by EU leaders today.
EU leaders also reiterated their opposition to US calls for Europe to launch a much larger stimulus packages to kickstart the world economy, fearing it would increase public deficits and possibly undermine the euro.
“It is not time to look at more growth measures. I disagree with this idea completely,” said German chancellor Angela Merkel shortly before the EU summit began. “A competition to outdo each other with promises will not calm the situation,” she added.
The US has pledged to spend 5.5 per cent of gross domestic product (GDP) on stimulus measures designed to kickstart economic recovery and has asked the EU to increase its own efforts. When taken together the EU is spending 3.3-4 per cent of GDP and wants to wait to see the effect of these measures before pledging more cash.
EU leaders are also expected to pledge at least $75 million in new EU loans to help recapitalise the International Monetary Fund.