By Sarah Collins - 29th October 2008
We in the EU are proposing a new regime of global governance
Commission president José Manuel Barroso on the EU's new strategy to stem the tide of the financial crisis
The European commission has announced a plan of action to help member states tackle the global financial crisis.
Addressing journalists during a press conference in Brussels on Wednesday, Economic affairs commissioner Joaquín Almunia said the EU is ready to increase to €25bn from €12bn the amount of aid standing ready to help member states in the most trouble.
The move comes against the background of the EU’s €6.5bn loan to Hungary, part of a €20bn total package made up of extra contributions from the IMF and World Bank.
The commission fears that newer member states like Hungary will be hard hit by the financial crisis and is standing ready to provide medium-term financial help to them.
European commission president José Manuel Barroso told reporters, “We don’t think the financial crisis is over. Part of the pessimism affecting global markets is linked to expectations of low growth and recession.
“It’s now clear that emerging economies won’t escape the contracting of global demand and crisis of consumer confidence.
“We in the EU are proposing a new regime of global governance.”
Part of the three-pronged strategy the commission president put forward are aimed at stemming the effects on growth and jobs, with the EU putting the European investment bank on stand-by for loans to small and medium-sized businesses, encouraging more public-private partnerships and looking at bringing forward payments to member states out of the €350bn worth of cohesion funds it has at its disposal to iron out economic and social inequalities across the bloc.
“Our top priority is to minimise the impacts on growth, jobs and purchasing power,” Barroso explained.
On an EU level, the commission’s strategy aims to create a “new financial market architecture” across the 27-member bloc, using competition policy and state aid rules to make sure bank bailouts in one EU country don’t have negative knock-on effects in other countries.
The third arm of the commission’s proposed strategy is to take part in coordinating a global response to the financial crisis, which will be examined at a world summit in the US on 15 November after calls for such a meeting - the “second Bretton Woods” - were made by French president Nicolas Sarkozy earlier this month.
However, Barroso warned that the crisis shouldn’t provide the opportunity for EU leaders to impose more protectionism in their economies, and also called on governments to step up the fight against climate change in the light of recent turmoil.
“Investment in energy efficiency in buildings can provide opportunities for the construction sector while helping the environment,” he said.
The commission is to present its plans at a meeting of EU leaders on 7 November ahead of a more comprehensive recovery strategy to be released on 26 November.
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