Focus on growth on eve of EU summit

New cars in a car park near Barcelona, 23 October New cars in a car park near Barcelona: Spain's economy has returned to growth

The summer is past and European summits return. Europe's leaders gather in Brussels on Thursday with the markets becalmed and some economic statistics to celebrate.

Even the threat - a few weeks back - of the Italian government falling scarcely ruffled the markets. The promise by the president of the European Central Bank, Mario Draghi, a year ago, to do whatever it takes to defend the euro continues to act as a shield against the bond market vigilantes. No one, it seems, is prepared to bet against the ECB.

It is true that almost on a daily basis there are reassuring signs of progress.

The Spanish economy has just edged out of recession after two years. Since 2008 its exports have grown by an impressive 14.6%. Unemployment at above 26% may have peaked. Italy is running a trade surplus and Greece this year will register a primary budget surplus excluding debt repayments. Ireland is set to exit its bailout programme in mid-December.

And yet despite all the austerity and spending cuts the level of debt, amongst the countries that use the eurozone, is still rising.

French unemployment, which was down in August, is set to rise again. Italy is struggling to bring down its labour costs without which it cannot be competitive. The Greeks are locked in argument with their lenders over a budget gap. It may need further funding. It was revealed this week that Greeks are, on average, 40% poorer than in 2008.

Even the most Panglossian of Europe's leaders recognises that the recovery is fragile and solid growth is needed so in Brussels the leaders will concentrate on supporting and expanding the digital economy and building a single digital market.

Discussions on telecoms, copyright, data protection, credit card payments and digital signatures can appear dry but are all central to what potentially will be the fastest growing economic sector in the future.

Waiting for Germany

UK Prime Minister David Cameron will try to focus the dinner conversation on reducing red tape and on revealing the cost of EU regulations to the business community.

Leo, a homeless artist in Greece, describes the country's "lost generation"

The difficulty for the European heads of government is that many of these ideas and initiatives take time when there are 26 million people out of work in the EU. Growth of at least 1.5% is needed to start reducing the unemployment lines.

In the short term, the most important step is to make it easier for small- and medium-sized companies to borrow at affordable rates.

Even while the focus is on growth, important decisions about the euro lie ahead but they cannot be taken whilst Germany is still in the process of forming its coalition government.

Almost certainly those decisions will not be taken at this summit. The eurozone has agreed on a banking supervisor but it has not agreed on a resolution mechanism for winding up failing banks. The Germans do not want to pick up the bill. Yet cleaning up the banks remains the eurozone's biggest challenge.

In Germany there is much discussion about Chancellor Angela Merkel's supposed plan for the eurozone. The idea is probably less developed than presented but countries would have to accept binding contracts which would give Brussels more power over national budgets and even social security and pensions.

If that was to happen, the Germans say it would require treaty change and that is strongly opposed by the French. What all this underlines is that in the months and years ahead, Europe will still be building up its defences against the crisis re-occurring.

Free movement?

On Friday the leaders will discuss migration from Africa and the Middle East and the need to prevent further tragedies at sea as occurred off the island of Lampedusa.

Former French Foreign Minister Bernard Kouchner said: "The EU has proved unable to forge a harmonised immigration policy... It is not even able to rescue those who still believe in the European dream." Italian Prime Minister Enrico Letta has said that Europe "cannot sit there and watch" and has called for "immediate action".

Patrolling the Mediterranean from the sky

There is a general consensus that Europe needs to do more but almost all plans run up against difficulties. Perhaps the least controversial step is to put more resources into Frontex, the agency that patrols the Mediterranean.

Others want to see the EU doing more to prevent migrants reaching the Libyan border. The EU already has a mission in the country but it has been frustrated at almost every level. Libya's borders are now so porous that persuading Tripoli to patrol its own shoreline is unrealistic.

Some leaders will want an open discussion about "burden-sharing" and a change to asylum policy but this is politically sensitive. Very rapidly a discussion about migration can become one about "the free movement of people" within the EU.

There will be expressions of solidarity but if there are to be major decisions about migration and asylum, they may not take place until June next year after the European elections.

So as Europe's leaders come to Brussels their crisis is less acute but the questions remain: how can the EU deliver growth, what further steps towards integration are needed and what does solidarity mean in a union of nation states? All of these questions will be argued over in the year ahead.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this

    Comment number 159.

    For me, my point remains the same, that just because our own system has some faults in it, doesn`t mean we should import some extra faults.
    Rather we should try to put our own system right.
    But there is no political will for that. And why would there be, when our politicians mostly want a Federal Europe?

  • rate this

    Comment number 158.

    157 Tears

    "My point is that democracy is the most important thing that we have"

    But we haven't really got a proper democracy

    I would like to add to J Hoovers point at *156 that we also retain a permanent civil service that often treats minsters as a minor inconvenience (Thatcher thought Yes Minister had it right) who interfere with THEIR running of the country

  • rate this

    Comment number 157.

    156 "Your point is?"

    My point is that democracy is the most important thing that we have. It`s the foundation upon which we can live as free-thinking individuals.
    Our fore fathers fought and died to achieve it, and if we let it go, we do our peril
    Just because we have some anomalies in our own system, (ie the House of Lords) doesn`t mean we should import extra, foreign ones to add to them.

  • rate this

    Comment number 156.

    "No member of the British public can vote to change any member of the European Commission"

    Nor the House of Lords, a judge, member of the royal family, civil servant or any number of people with a bearing on our lives, but we can vote for those who may.

    Your point is?

  • rate this

    Comment number 155.

    26 "About time they all admitted they are a bunch of idiots"

    They are much more dangerous than a bunch of idiots.
    They have undermined democracy, and we have allowed it to happen.
    No member of the British public can vote to change any member of the European Commission.
    We are racing towards world government,and national boundaries are gradually being abolished.

  • rate this

    Comment number 154.

    136.David Horton
    "Reason? They know that the arguments for staying in the EU are flimsy"



    This explains it:

  • rate this

    Comment number 153.

    1967: De Gaulle says 'non' to Britain - again
    The French President, Charles de Gaulle, has for a second time said he will veto Britain's application to join the Common Market.
    He warned France's five partners in the European Economic Community that if they tried to impose British membership on France it would result in the break-up of the community.

    He was right. Should have listened

  • rate this

    Comment number 152.

    48.The J Hoovers Witnesses
    How are you going to persuade the other 250 million people to back that idea?

    I don't need to, dear fellow.

    Once Britain leaves, the EU will change.

    We pay in too much money for them to lose and we buy too many EU goods for them to cut us off.

    Once we've gone, others will wonder how they ever let the EEC morph into the EU.

    The scales will be lifted.

  • rate this

    Comment number 151.

    "we want, and urgently need, a referendum"


    Not sure who "we" are, yet again.

    Sorry to hear of your emergency though. What's likely to happen to you if you don't get one? Anything funny?

  • rate this

    Comment number 150.


    "Gold plated red tape thats what the british civil service was made for"


    Yeah. But it wouldn't really be red then would it?

  • rate this

    Comment number 149.

    "I WILL NOT BE VOTING IN THE EU ELECTION'S. I do not wish to be a so called citizen of the EU"


    Are you one of these people who drinks water from taps labelled "NOT DRINKING WATER", just to teach them too? You'll be running up "down" escalators next...

  • rate this

    Comment number 148.

    146.David Horton
    "Let's vote to sack this federal silliness and go back to the EEC"


    How are you going to persuade the other 250 million people to back that idea?

  • rate this

    Comment number 147.

    Gold plated red tape thats what the british civil service was made for

  • rate this

    Comment number 146.

    What British business means is not 'less red tape', but no red tape at all
    And was that not the original point of the EEC? To get rid of the unnecessary tax, tariff and duty bureaucracy? To standardise trade rules and measures? To speed up international freight movement?

    Still sounds ideal to millions of Britons.

    Let's vote to sack this federal silliness and go back to the EEC.

  • rate this

    Comment number 145.

    What British business means is not 'less red tape', but no red tape at all. As was exposed when Cable started his war on the 'thousands' of H&S regulations (there are 150 for the whole country) this smacks of the Tories trying to get 'business going' not by hard work and innovation but by creating a Victorian 'work till you drop', dangerous, low paid environment. Good for them, but not for us.

  • rate this

    Comment number 144.

    as far as the uk is concerned the whole EU is a sham...the people have never been consulted we have to put up with undemocratic idiots telling us what to do....and whats more the EU is a complete failure.

  • rate this

    Comment number 143.

    EU has problems:

    1) CAP is morally indefensible and economically absurd
    2) Too many countries who believe that borrowing in ever increasing amounts is the right way to run a govt.
    3) A EZ which is completely flawed because politics stopped the designs containing economic safeguards
    4) A belief in imposing ever more social welfare costs without consideration of cost

  • rate this

    Comment number 142.

    139 QOT

    "-still true today"

    Indeed it is. But the reason there will be no change now is that the US is in decline and our dependence on them is entirely one sided

    China will be courted now as a future leader but doubtless they will remember how we treated them in the 19th cent.

    Not only did we burn down their summer palace, forced them to concede territories but also an opium war

  • rate this

    Comment number 141.

    Yes, I think that is right. The real purpose of the EU elite has been to create a single nation under their rule. They justify this in the ECJ by pointing to the rather flimsy words "ever closer union", and conclude that the commission has an unfettered mandate to do as it must to bring this about.

    The idea that a self appointed elite will dictate how people live is at the core of the EU.

  • rate this

    Comment number 140.

    "He went on to list a number of aspects of Britain's economy, from working practices to agriculture, which he said made Britain incompatible with Europe.

    --still true today"


    I completely and utterly agree with you and De Gaulle.
    Britain is incompatible with Europe.
    So you'll be voting to leave then?


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