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EU Leaders Agree 120 Billion-Euro Pact to Promote Growth, Jobs

29 June 2012 09:30 (UTC +04:00)

Baku â€“ APA-Economics. European Union leaders meeting Thursday were set to commit to a growth pact worth 120 billion euros ($149.8 billion), including a boost in the capital of the European Investment Bank of EUR10 billion, as well as finalizing a plan to strengthen the euro zone by year-end, according to a draft of their conclusions, Fox Business reported.

"It is crucial to boost the financing of the economy. EUR120 billion (equivalent to around 1% of EU [general Net Income]) are being mobilised for fast-acting growth measures," the draft said.

The agreement of a growth pact would represent a political victory for French President Francois Hollande who pushed the issue during his election campaign. He argued the growth pact was needed to offset a fiscal compact agreed in January which ratcheted up further austerity policies in Europe.

Still, despite the big headline numbers, the pact seems to provide little new real money and relies on ideas that have been circulating for some time about how to better deploy the EIB and EU budget funds. Many EU officials have said they don’t expect the policies to produce a significant change in the economic outlook.

The draft also said that European Council President Herman Van Rompuy would be asked to report back in October and finalize by year-end his report, released Tuesday, on ideas for deepening integration within the euro zone.

Mr. Van Rompuy prepared the report with European Central Bank President Mario Draghi, European Commission President Jose Manuel Barroso and Luxembourg prime minister and head of the euro-zone finance ministers Jean Claude Juncker.

"The President of the European Council is invited to develop, in close collaboration with the President of the Commission, the President of the Eurogroup and the President of the ECB, a specific and time-bound road map for the achievement of a genuine Economic and Monetary Union," the draft said, adding that "An interim report will be presented in October 2012 and a final report before the end of the year. There will be regular and informal consultations with the member states and the EU institutions."

The leaders, whose meeting was due to go on until Thursday evening before reconvening Friday morning, were also set to agree to push ahead by year-end with a banking union--including a bank-deposit guarantee and a framework to wind down failed banks with cross-border activity. However, in a concession to reluctant non-euro zone member states, the draft conclusion said there should be space for those states to differentiate their participation in such a union.

"Whilst the integrated financial framework should cover all EU Member States, it should allow for specific differentiations between euro and non-euro area member states in areas that are preponderantly linked to the functioning of the monetary union and the stability of the euro area rather than to the single market," the draft said.

In separate matters addressed at the summit, leaders were set to finally agree that the headquarters of the Unitary Patent--an EU agency overseeing a common patent policy--would be in Paris, with divisions operating out of London and Munich. The location of the headquarters had long held up this crucial piece of policy.