Leaders of the EU called on the 27 member states on Friday to coordinate their economic policy more closely to boost growth and ensure the bloc emerges strongly from the financial crisis.
Meanwhile, Greece said on Friday it is increasing taxes on tobacco and alcohol, while British finance minister Alistair Darling said Britain faces toughest cuts in 20 years
EU leaders made the fight against climate change a priority at talks launching Spain’s six-month presidency of the bloc, and tried to allay concern that the EU leadership may lack cohesion as it implements changes under its new Lisbon reform treaty.
PHOTO: REUTERS
“We need more economic growth, now and in the future,” EU President Herman Van Rompuy told a news conference after talks with European Commission President Jose Manuel Barroso and Spanish Prime Minister Jose Luis Rodriguez Zapatero. “Only by working together very closely at all levels will we be able to deliver on the main challenges facing us.”
Barroso has just started a second five-year term as head the European Commission, the EU executive, and Van Rompuy is a week into a 2-and-a-half-year term as the first president of the Council of EU leaders, a post created under the Lisbon treaty.
Zapatero will work alongside them for six months in a mainly organizational role during Spain’s six-month presidency.
The EU’s statistics agency confirmed on Friday its estimate that the 16-country euro zone emerged from recession in the third quarter of last year, with 0.4 percent quarter-on-quarter growth after five quarters of falling output. The EU as a whole grew 0.3 percent compared with the previous quarter.
However, unemployment is rising fast, many countries face soaring debts and budget deficits, and Van Rompuy said this week the long-term economic outlook was “cloudy.”
Van Rompuy has called for an annual growth rate of at least 2 percent of GDP to keep pace with the rest of the world and EU leaders have increasingly underlined the need to match the rise of emerging powers such as China.
“The balance of power has shifted and Europe is more on the defensive now than it was a few years ago,” Van Rompuy said.
Zapatero suggested on Thursday setting binding economic goals for member states under a 10-year plan to boost growth and competitiveness, and called for corrective measures for those that did not comply.
Barroso and Van Rompuy signaled their backing in principle for tough measures to boost recovery but made clear a decision could not be taken on such proposals until after they are discussed at a summit in Brussels on Feb. 11.
Spain has proposed bringing together the heads of the 16 states that use the euro currency to discuss policy, reviving an idea raised by France. Germany has opposed this in the past and Barroso and Van Rompuy did not comment on the proposal.
GREECE
Greece’s center-left government said on Friday it is increasing taxes on tobacco and alcohol, looking for 1 billion euros (US$1.43 billion) in badly needed revenues as the country grapples with a debt crisis.
The Greek Finance Ministry said the increase will take immediate effect for alcohol sales, while cigarette prices will increase on Tuesday.
“The measure will help increase budget revenues and deter consumption, to the benefit of public health,” a ministry statement said.
The government has ruled out any increase in value added tax, currently at 19 percent.
Under the changes, tax on a packet of cigarettes will rise from 57.5 to 70 percent. Greeks are among the heaviest smokers in the EU.
For most drinks, tax per liter of alcohol will rise from US$16.30 to US$19.60, making the increase minor for wine and beer but more significant for spirits.
The new prices would mean a packet of cigarettes, commonly priced at US$4.57, will cost US$5.15 and add about US$1.43 to the price of a bottle of whisky, currently selling at about US$20.
Under heavy pressure from EU partners and international markets to improve its finances, Greece has promised to bring its soaring budget deficit below 3 percent of economic output by 2012 — from an estimated 12.7 percent last year.
BRITAIN
British finance minister Alistair Darling warned yesterday that Britain faces its toughest spending cuts in two decades if the ruling Labour party wins this year’s general election.
Darling also confirmed to the Times newspaper that there would be a budget before the election, which must take place by June.
That will quash speculation that British Prime Minister Gordon Brown is preparing to call an early election.
Darling, the Chancellor of the Exchequer, said in an interview that severe spending restraints were “non-negotiable” if he is to bring down the £178 billion (US$285 billion) budget deficit.
“My priority is to get borrowing down. Once recovery is established, we have to act,” he said. “The next spending review will be the toughest we have had for 20 years ... to me, cutting the borrowing was never negotiable. Gordon accepts that, he knows that.”
Darling told the newspaper that voters supported his effort to balance the books.
“Most people know that public spending has doubled over the last 10 to 12 years, so we are coming off a much higher base,” he said. “We are not talking about a situation where we have already cut to the bone.”
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