EPP Growth and Competitiveness Package

Europe needs fiscal stability and structural reforms for growth, and growth for stability. We can only overcome the crisis if we fully work both sides of this coin. The EPP Group proposes a package of measures which will restore credibility and boost growth to grow out of the crisis.

Europe must be committed to the model of the social market economy. The future of Europe’s peoples and nations is a community of responsibility and solidarity, united in the social market economy.

The EPP Group wants to achieve sustainable growth in order to provide the next generation with jobs instead of debt. Therefore we need structural reforms in the Member States to enhance their competitiveness. We need a fully operational internal market including a better functioning and transparent financial market.

EU spending must be more clearly targeted and concentrate on projects that deliver competitiveness and that support major European goals; a more coherent budgetary policy means coherence must exist not only between different policies, but also between national budgets and the EU budget.

1. Make the necessary and overdue reforms in the public, market and education sectors: A number of our Member States have demonstrated that this is the basis for growth and jobs. Only reform, programmes and structural changes at Member State level provide the EU with the possibility to adapt to global developments and protect its competitiveness as well as defend its social model.
 

• The EU must streamline and render more precise its strategies for growth and competitiveness along with ensuring the fiscal stability and reducing the countries' sovereign debts with the Europe 2020 Headline Targets and the Euro Plus Pact. The aims of these strategies are right, but they need to become binding and translated into actions at European and national level. The failures of the Lisbon Strategy showed that a policy is only as strong as the will to fulfil it.
• The European Semester procedure must be a chance for each Member State to take stock of progress towards meeting their commitments regarding the Europe 2020 Strategy Headline Targets, the Euro Plus Pact, Single Market governance and other major common European objectives.
• Pressing examples are structural reforms paving the way for competition and new enterprises, the reform of pension systems to become sustainable as well as the 'flexicurity' of labour markets to make them more accessible to the young.
• The EU must emphasise its initiatives for growth and competitiveness in order to ensure that each Member State can benefit. All Member States should focus more on growth-oriented policies and give priority to reforms aimed at enhancing innovation and work productivity.
• We have to fully exploit the strength of our European social dialogue model: an intensified and loyal partnership among social partners is the best way to achieve successful structural reforms.

2. Push Growth Dossiers: The EU Institutions must adopt the following key pieces of legislation on growth in the next 12 months:
 

• The Council is keeping the single European Patent on hold as there is no agreement on the seat. EU patents will cut back costs for the protection of patents in the EU (25 MS participating) by 20% and achieve annual savings of around 50 million Euro per year, mainly for SMEs. Moreover, targeted measures have been agreed between the Council and the EP in order to facilitate SME access to patenting;
• The Professional Qualifications Directive needs to be revised without delay in order to reduce hindrance and bureaucracy. Stricter entry requirements for certain professions should, however, not constitute a barrier to mobility;
• Implementation, enforcement and completion of a digital single market in Europe;
• A single set of rules for data protection would alleviate EU businesses from an enormous burden and guarantee more legal security. Whereas the current fragmented rules cost EU businesses 2.9 billion Euro per year, the new Regulation will save 2.3 billion Euro and will create numerous incentives to enhance cross-border business;
• A reform of public procurement rules can be a powerful tool for growth. The overall value of tenders represents 19% of the total expenditure of goods and services in the EU. Innovative and strategic allocation of these resources is a necessity for growth;
• We must ensure that SMEs can operate all over Europe by granting them access via mutual recognition, reduction of red tape and establishing a 'one-stop-shop' for VAT, as well as improving access to finance for SMEs;
• Valorisation of the brand "Europe": maximise productivity and quality for all manufactured products in the EU;
• Removing special rules for regulated professions, in accordance with the specifications of the Services Directive, should lead to improved competition both on a domestic level and in all Member States;
• The manufacturing industry should be supported and sustained, as it is the backbone of the EU economy. Industry plays a crucial role and we need an offensive and innovative industrial policy to generate growth;
• The Energy Efficiency Directive, if adopted and swiftly implemented as per the EPP Group line successfully defended in the Committee on Industry, Research and Energy (ambition coupled with maximum flexibility and a relatively low administrative burden), will be able to achieve its ambitious targets. Energy efficiency can reduce our dependency on imports, thereby improving the balance of trade, reducing indebted countries’ trade imbalances and boosting growth in all European countries;
• Greater support should be given to innovative technologies with a view to fostering a more efficient use of resources and combating pollution (including chemical pollution) in a more targeted manner;
• The third multi-annual programme of EU action in the field of health for the period 2014-2020 will allow the promotion of growth: The healthcare sector is much more than a way of making progress in the treatment of patients; it must also be a vector for growth, a source of jobs in these times of crisis and a cornerstone of the European economy. Healthcare means more than just deficits;
• Defend the licit economy: in a period of economic crisis, the commercial and speculative activity of organised crime and corruption in the public and private sectors represents deterioration on the markets and serious damage to the licit economy. It is therefore necessary to strengthen police and judicial cooperation between Member States and third countries to combat this criminal phenomena.

3. Growth-enhancing investments: We need to undertake and finalise the following actions in the next 12 months:
 

• A better use of EU funds for growth-enhancing projects: The Commission should propose a comprehensive proposal for activities to provide economic growth and jobs especially targeted at SMEs and R&D and innovation. The financing of these actions should be assured by the reallocation within national envelopes of all national operational programmes in the current MFF and a transfer between headings and sub-headings which should be made possible by the introduction of a reallocation flexibility in the MFF 2014-2020;
• An ambitious MFF 2014-2020 with a sufficient level of resources that will ensure the financing of a renewed growth agenda, putting the accent on competitiveness. The setting-up of a flexible and reactive Financial Framework will be easy to adapt on the basis of emerging needs and new political priorities. A substantial increase in key EU programmes for R&D and innovation (i.e. Horizon 2020, COSME) can be achieved in balance with cohesion policy. The renewed cohesion is to be firmly focused on growth and competitiveness as well as connected in an appropriate, flexible manner to Horizon 2020 through the stairway to excellence concept;
• Further funds should come from the global MFF margin made up of unused margins, de-committed and unused appropriations carried over to the next year on which the EPP Group will insist during the negotiations on the new inter-institutional budgetary agreement;
• Stronger cooperation with the private and banking sectors is needed through:
  • The use of innovative financial instruments such as project bonds, which can create a multiplier effect on the EU budget by attracting private investment on commercially-viable projects such as in the field of transport, energy and ICT infrastructures, and should be provided with an adequate budget in the 2014-2020 period. After completion of the pilot phase, which was already agreed by the EP and the Council, we should promote a new approach regarding the utilisation of project bonds including a stronger implication of European financial institutions;
  • Enhanced EIB action to support access to finance for SMEs; to contribute concretely to the achievements of the EU's objectives on economic growth:
  • Better combine the resources of the EIB with European funds;
  • Swift adoption of the Commission proposal to raise EIB capital by 10 billion Euro.
• In order to support innovation and investment in new techniques and business models, ways to further enhance and stimulate European venture capital must be found, to be supported both by public sector institutions (EIB, national public funding), and by increasing private funding;
• Trans-European networks for transport, energy and digital infrastructure should benefit from the above-mentioned growth-enhancing investments.

4. Make the Single Market a reality: The Single Market is Europe's powerhouse, the most important European stimulus for growth. But its implementation is very unsatisfactory, e.g. in the services and digital sector, and this is all the more evident in the year of its 20th anniversary.
 

• The Institutions should agree on a binding calendar and concrete measures for enforcing the Single Market legislation, abolishing obstacles to the free circulation of goods, services, persons and capital within the framework of the Social Market Economy. Up to 2% of GDP could be gained by the full implementation of the Services Directive.
• We have to focus the second edition of the Single Market Act on sharpening the instruments to ensure the implementation and enforcement of the existing Single Market acquis. The Commission needs to be given the possibility of 'fast track infringement procedures' to enforce the Single Market acquis.
• We have to ensure that the Digital Agenda will not fall behind schedule but will be pushed forward with more ambition. Connectivity of people and businesses and the potential of eCommerce can serve as a main engine for growth as the EU could gain 4% of GDP by stimulating the fast development of the digital Single Market.
• We need to take decisive steps towards a banking union. A well-functioning and transparent financial single market with well capitalised financial institutions is a prerequisite for sustainable growth. We support a reform of the banking and financial system which sees banks returning to their primary function, which is serving the real economy, stimulating entrepreneurship and economic development. We strongly urge that all decisions made at the level of the Euro area do not create additional risks to the banking system and the real economy in Member States outside the single currency area. We promote the taxation of the financial sector in accordance with the risks taken and favour a European approach to bank resolution and EU deposit guarantee schemes with more centralised (single) supervision of financial institutions. A solid and reliable banking system is key to our prosperity. A multiplier (the “SME Supporting Factor”) to be applied in the Risk Weighted Assets calculation for loans to SMEs in order to balance out the quantity increase in minimum capital requirements must be introduced.
• "More society is good for the State". It is necessary to re-think the European social model: a common welfare system based on horizontal subsidiarity, with collaboration between the State and the free initiative, entrepreneurship and non-profit organisations. It is fundamental to re-launch social solidarity. It is necessary to promote social economy, representing 6% of European employees (12 million people, especially young people):
  • defining social economy in a clear but unrestricted way;
  • promoting access to financing for social economy;
  • eliminating the bureaucratic burdens that often create unnecessary and unsustainable costs.
• At the same time we have to enhance the conservation of cultural heritage and the development of the cultural and creative industries that are sources of economic growth in terms of employment, training and promotion of European values and cultural identity.

5. Give priority to the pressing problem of youth unemployment!
 

• Member States and the Institutions should swiftly agree on binding targets and measures in the areas of youth mobility (Youth on the Move) and language skills as well as encourage youth entrepreneurship through simplifying and supporting start-up procedures and financing.
• The Youth Opportunities Initiative (YOI) on stronger cooperation between the EU and the Member States for defining and implementing measures tackling youth unemployment must be implemented as soon as possible with a clear and binding timetable. The Commission has to focus on priorities drawn up on the real needs of the youth and work closely with the Member States to implement them: tackle early school leaving, improve qualification and vocational training, support and boost youth entrepreneurship, stimulate job opportunities for young people in the growing areas/sectors (green economy, IT, R&D).
• EU funds must be used quickly and efficiently for measures tackling high youth unemployment, speeding up youth entrepreneurship and easing SME access to finance as well as providing appropriate support such as managerial and entrepreneurial skills and training with a view to supporting job creation for young people.
• Greater use should be made of the opportunities for funding vocational training under the Leonardo Programme, which should also be adapted to suit the needs of the labour market.
• Member States with the lowest rates of youth unemployment should be studied to ascertain key success factors and ideas, such as the dual vocational training system, which should be regarded as benchmarks.
• The reform of the Common Agricultural Policy should re-dynamise Europe's rural areas and boost the number of young people going into farming.

6. Cut red tape: The EU and the Member States should commit themselves to cutting administrative burdens and modernising their public administrations:
 

• We call for cutting the bureaucratic burden by 25% until 2015. We call on the Commission to stop any legislative proposals which mean additional costs for local, regional and national administrations or companies unless they are compensated through clearly identified reductions of administrative burden elsewhere;
• Less bureaucracy, more jobs or "one more worker": every day in Europe there are 23 million SMEs facing a lot of costs for bureaucratic fulfilments. If we cut these burdens, allowing every SME to hire one more worker, we will have 23 million more jobs!;
• Member States have a key responsibility for cutting bureaucratic burdens as they often wrongly implement or 'gold plate' European legislation: This is responsible for a burden¹ amounting to 40 billion Euro! They urgently have to deliver in the interest of SMEs;
• The SME Test must be evenly applied and fully respected in all Member States. SMEs need our support, as they are the job creators;
• e-Government must be introduced across Europe with a view to simplifying administrative and authorisation procedures. To speed up the Institutions' response time to the needs of businesses and to define attractive, shorter time limits for feedback;
• Member States have to swiftly implement the Late Payments Directive and a system to compensate debts and credits towards public administration has to be put in place;
• There is a pressing need to simplify procedures and reduce the administrative burden across the board, such as by overhauling European agricultural policy. The Common Agricultural Policy (CAP) must be streamlined and made more efficient.

7. Free Europe's trade potential: A proactive and open external trade policy, investment and market integration are key drivers of strong, sustainable and balanced growth and must accompany these internal reforms to allow for market access of EU products and services.
 

• Strengthen the transatlantic market especially by removing non-tariff barriers to trade.
• Trade Agreements with third countries should take the interests of European producers into consideration through a gradual liberalisation of our markets. Our trade policy should also promote and protect our 'Made in Europe' brand and therefore also focus on fighting counterfeiting and illegal imports. Furthermore, it should tackle the specific concerns raised by the policy of our trade partners who adopt aggressive strategies without respecting fundamental environmental and labour rights, animal production and production standards.

All these instruments and goals need to be subject to fast, efficient and non-bureaucratic management by the European Commission, in particular making use of the European Semester. The EPP Group fully backs the Commission in its role and recommendations in the European Semester. The Fiscal Compact model of an international agreement is legally excluded for any growth package, as EU competencies are affected. Therefore, another solid base for clear political and legal commitments needs to be assessed, further strengthening the Community method, fully respecting the role of the EU Institutions (Commission, Parliament, Council, European Council) with the strong involvement of national parliaments and social partners. The EPP Group calls on signatory States of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union to ratify it as soon as possible for the purpose of sending a message of accountability, consistency and solidarity to Europeans, the international community and financial markets.

¹ See report of the High Level Group of Independent Stakeholders regarding bureaucratic burdens