EU agrees to provide major stimulus to economy

By Simon Taylor, Jim Brunsden and Dana Spinant - 12.12.2008 / 16:34 CET

Agreement obscures lowering of ambitions and continued deep divisions.

Please log in to read this article:

Don't have a login yet?

Discover your benefits and register for free now! It only takes a minute.

Democracy in distress

Political leaders seem to be structurally condemned to short-termism.

Latest private-sector involvement plan deemed unacceptable; former European Commission president to head up bail-out fund's investment arm.

Danish finance minister says negotiations are continuing but there are areas of concern.

Fact file

“An effort equivalent in total to around 1.5% of EU GDP” (an earlier version said “a fiscal effort equivalent in total to at least 1.5% of EU GDP)

must be limited in time, targeted at sectors worst affected by crisis and most important for economy (e.g. automotive and construction);
can include increased public spending, cuts in taxes or social security contributions, aid for companies and poorest households;
emphasis on structural reforms under Lisbon strategy.

increase in European Investment Bank funds of €30 billion in 2009-10 for small- and medium-sized businesses, renewable energy and clean transport, especially automotive industry;
frontloading of money from EU structural and cohesion funds and faster implementation of programmes;
boosting investment in a number of sectors including broadband internet, especially in rural and remote areas;
additional action to support emploment including reducing non-wage labour costs;
speeding up of use of European Globalisation Adjustment Fund;
possibility of reduced VAT rates for labour-intensive services and tax incentives for green products and services.
two-year exemption from need for EU need for state aid up to €500,000;
cutting length of tendering period for public procurement projects from 87 to 30 days.