The key importance of growth in Europe

At their meeting in Berlin on 24 May, Foreign Minister Guido Westerwelle and British Deputy Prime Minister Nick Clegg were agreed that dealing with Europe’s debt crisis would take fiscal consolidation and boosts to growth. Westerwelle called the two policies “two sides of the same coin”, adding that Germany and the United Kingdom shared many of the same goals for a stable and dynamic Europe. The two men discussed possible ways out of the crisis in a friendly and convivial atmosphere.

Westerwelle emphasized the three pillars on which policy to escape the crisis had to be built: budget discipline, solidarity in Europe and growth. Growth, he said, resulted from competitiveness. Clegg emphatically concurred, saying that fiscal discipline and growth were inextricably linked. The Deputy Prime Minister was adamant that growth could not be generated on the basis of debt and fiscal deficits.

The German Foreign Minister underlined Germany’s and Britain’s efforts to consolidate their budgets. Their two governments, he said, had been the first to significantly cut public spending. Westerwelle declared that Germany saw the UK as an important ally in the question of fiscal discipline and in their shared recognition that the accumulation of debt had to end. Growth, he reiterated, was the key to success.

Westerwelle also welcomed the fact “that people in Europe are increasingly acknowledging the need to accompany the fiscal compact for less debt with a growth compact for more competitiveness”. He went on to underscore solidarity as the third component of that policy, pointing out that this was the approach taken by the EU heads of state and government at their dinner on 23 May.

Six points to boost growth

Westerwelle listed six points which he saw as necessary components of any European solution which would encourage growth: using the EU budget to aim for growth; mobilizing as yet unused EU funds to promote growth; improving access to investment capital, with the involvement of the European Investment Bank; promoting infrastructure projects; completing the internal market (including the digital media and energy sectors); and strengthening free trade.

For his part, Clegg highlighted the importance of the internal market to generating new economic growth. If progress could be made in developing that market, he said – such as in the services and energy industries – a great many jobs would be created.

Westerwelle emphasized that “growth is of key importance to the German Government”. It was a goal which was shared by the UK Government, he said, adding that a concrete agenda for growth now had to be drafted in time for the June European Council.

Let’s not make it easier to accumulate debt

Nonetheless, Westerwelle insisted, making it easier to accumulate debt would not be the right way to do that. The debt crisis would not be solved by more debt, he said. Germany, he went on, considered that Eurobonds would create the wrong incentives. As he explained, “they don’t solve the problem of excessive debt and insufficient competitiveness.” In contrast, he elaborated, they would instead make it easier to accumulate debt and dissipate the pressure to undertake vital structural reform – competitiveness-boosting reform which he saw as the only way of overcoming the crisis longterm. Westerwelle expressed respect and recognition with regard to the EU countries which had started down the difficult road of reform.

What governments had to do now, the Foreign Minister said, was find a compromise for Europe to overcome the crisis. He stressed the need for a joint, viable solution, indicating that the six points he had outlined provided possible starting points. He concluded with the exhortation that “It is now up to us to step up to our responsibilities and find a way.”

Article by Foreign Minister Guido Westerwelle on the six-point growth compact, published in the international media on 23/24 May

“Europe’s path out of the crisis: growth through competitiveness” – Policy Statement by Foreign Minister Westerwelle in the German Bundestag on 11 May 2012

Last updated 24.05.2012

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