During the course of a debate with the Council and the European Commission, Members gave their views on the preparations for the Spring European Council on 25 and 26 March 2010.

Council: the President-in-Office of the Council, Diego López Garrido recalled that the EU is witnessing an extraordinarily strong dynamic, being in the midst of a serious economic crisis and at the same time implementing a new treaty, the Treaty of Lisbon, getting new institutions off the ground, and carrying out a very broad reordering of the regulation of our economic systems.

The Spanish Presidency recalled the main points on the European Council’s agenda:

the commitment to a new strategy for growth and the creation of high quality jobs and the issue of governance: the Council wants this governance to revolve around its own political leadership and the action of the Commission with the close collaboration and monitoring of everything by Parliament ; the fight against climate change : the EU must continue holding onto its leadership and confirm a commitment by developed countries generally to collaborate with those that are still not developed in order to move unequivocally towards legally binding commitments at the Cancún conference in Mexico; the issue of the financial situation in Greece and the refinancing of the country’s public debt which was a political commitment to support the financial stability of the euro area.

Commission : the President of the Commission asked the European Council do two things: show that it is responding to the financial crisis which means that public finances at national level are under unprecedented strain and work on Europe’s long-term strategic framework and long-term strategic objectives, i.e. our economic future and climate change.

The targets which the Commission has put on the table are: (i) the need to increase the level of employment; (ii) to invest more in research and innovation, (iii) to meet our 2020 climate and energy targets; (iv) to improve our educational performance and (v) to combat poverty.

Responding to the economic and financial situation in Greece, the President of the Commission stressed that Greece’s fiscal effort to reduce its deficit must continue. The Commission believes it is now appropriate to create, within the euro area, an instrument for coordinated action which could be used to provide assistance to Greece in case of need. The framework for coordinated action should be understood as a safety net to be used only when all other means to avoid a crisis have been exhausted, including, first and foremost, exhausting the scope for policy action at domestic level. Beyond technical aspects, any possible solution must reinforce and strengthen the unity and the coherence of the eurozone and its governance.

Position of the political groups: whilst it is not on the formal agenda of this European Council, the economic and financial situation in Greece were at the heart of the debate :

EPP: the President of the EPP Group called on the Heads of State or Government to reaffirm European solidarity and define their roadmap so as to bring Europe out of the crisis. Referring to the failure of the Lisbon Strategy, he asked the European Council to go beyond words and to give serious consideration to our common economic objectives on the basis of the Commission’s 2020 proposals. Stressing that it is in everyone’s interests to guarantee the stability of Europe and of the European Monetary System, the President of the group recalled that it is imperative that a European solution is found to this crisis, in accordance with European rules and within the framework of European financial aid mechanisms, including the IMF. In this context, he indicated that Europe must show solidarity with Greece but that Greece, too, must carry out those internal reforms that are required in the short and medium terms and in order to warrant this solidarity, particularly with regard to reform of public finances. I n a period of crisis, he called on Member States to coordinate their budgetary, fiscal and social policies better, and strengthen European governance.

S&D : the President of the Group stressed that solidarity with Greece makes economic sense and that this message must be heeded by Germany. Subscribing to the notion of a safety net, he indicated that it is not about transferring money from taxpayers in other Member States into Greece’s coffers but about enabling Greece to borrow money on the international markets at the same interest rates as are available to the other countries. This will put a stop to the speculators on the financial markets who have been encouraged by the lack of solidarity shown to Greece and who will then turn their attention to Italy, to the UK and to Spain. The Group President recalled that it is up to the Commission and not the IMF to make proposals on achieving a sensible stabilisation within the euro area. He also wanted to send a clear signal to the international financial markets that speculation will not dismantle the euro zone. ADLE : the President of the Group indicated that the only way to assist Greece and the euro zone is is to take a firm decision on the basis of a Commission proposal. He is pleased that Mr Barroso has announced that he is going to propose a European instrument that will enable the interest rates on Greece’s government bonds to be reduced, issuing bonds at European level, since Europe has liquidity and credibility. He insisted that only such an instrument will solve the problem of the gap between the German rate, which stands at 3.05%, and the Greek rate, which is 6.5%. Greens/EFA: the Group representative recalled that this Greek crisis – this crisis facing the euro – is actually a European crisis and that discussions have been going on for weeks and months without Europeans being able to make the necessary decisions. Deploring Mme Merkel’s lack of political will and populism in Germany, she stressed that the continued existence of the euro – of a single currency – in the long term can only be secured if Europeans pull together and integrate their economic policy. She underlined that this is a time for solidarity, but henceforth, Greece will only be able to obtain credit on favourable terms if this is not a one-way street. The state of Greece must utilise the crisis to bring about real reforms and seize the opportunity to create a better state. ECR : the Group representative considered that Greece does need European solidarity, but that we should very firmly set conditions for Member States, to ensure they follow a rational economic policy. Sting that Greece probably adopted the euro too early, he stressed that we are also facing a problem which is seen so often in Europe, namely that ideology and politics are more important than the economy. He did not feel that greater bureaucracy, integration and regulation in Europe could help what should be the greatest objective – increasing competitiveness . GUE/NGL : the Group representative also agreed with the call for solidarity with Greece and warned against renationalisation. Recalling Mr Barroso thinking aloud as to whether the worst of the speculation on the financial markets should be banned outright, he deplored the fact that the increasing social chasm in the EU is not on the agenda of the European Council. He was critical of the EU 2020 economic strategy because it is based on the failed ideology of competition which led to the crisis, and wants a strategy that gives social and ecological needs priority over competitive interests. EFD : the Group representative considered that the EU faces a crash test of the strength of the European currency and, more importantly, of the intentions of the leaders of the European Union to defend it. She hoped nevertheless that the EU achieved something other than the single market and the euro.

Reply to Members: Mr Maroš Šefčovič, on behalf of the Commission, recalled that the EU is not just a group of countries but a European family, and the principle of solidarity must come into play if a family member has a problem. The Commission is therefore ready to propose an instrument for coordinated assistance to Greece which will be fully compatible with European law. He stressed the need for higher employment, a better gender balance and stronger education. It is also very clear that the EU needs to invest more in research and development, to fight poverty, and to have a concrete strategy for Europe and European citizens.

With regard to the question of Greece, the President-in-Office of the Council indicated that the Council has very clear ideas. Firstly, Europe is an integration of economic policies. Secondly, Europe is based on solidarity and therefore has a strong social content. Thirdly, Europe has economic and financial stability. He was sure that the European Council will strengthen and preserve that stability. A strong political message on Europe will be sent out, one of support for its economy, support for its currency and, therefore, a message of support for solidarity.

Debate in Parliament

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In preparation of the spring meeting of the European Council, the Council adopted the following conclusions:

1) New EU strategy for growth and jobs: EU 2020 strategy : the European Council is due to agree on the general framework of the strategy, in the light of a communication from the Commission. It is expected to adopt the new strategy at its meeting in June.

The Council emphasises the need to firmly set the EU on an upward path of sustainable growth and employment creation . It considers that the "Flagship Initiatives" set out by the Commission provide a good basis for reflections on how to focus efforts on the appropriate areas. It also emphasises that restoring macro-economic stability and returning Member States' public finances on a sustainable path are prerequisites for growth and jobs, and that growth is important to support fiscal consolidation. Structural reforms and fiscal consolidation under the Stability and Growth Pact (SGP) need to go hand in hand according to the Council and it stresses the need to ensure that macroeconomic and fiscal constraints are fully observed as they are a prerequisite for long-term sustainability of our social models.

The Council takes note of the proposal to mobilise EU policies and instruments , including legal and financial instruments (including cohesion policy), to pursue the EU2020 objectives. It supports in particular the proposal to: (i) make full use of the single market policy to reduce fragmentation and remove obstacles to cross-border activities; (ii) develop a strong external economic agenda; and (iii) improve instruments to help finance Europe 2020.

The Council takes note of the proposal to define five headline targets for the EU to be achieved by 2020, and to translate these into national targets. As regards the choice of headline targets, the Council underlines the importance of outcome oriented targets and of ensuring coherence across the different headline targets and between EU level and national level targets. The Council further underlines: (i) the need for a clear link to enhancing productivity and to growth and jobs as well as the need to respect the principle of subsidiarity; (ii) the urgent consideration should be given to a wider indicator that would reflect R&D and innovation; (iii) the need to give further consideration to the principle and the correct design of a possible social inclusion target.

The Council recommends that progress towards meeting the EU and national targets should be monitored rigorously by the European Council at least annually on the basis of contributions from the European Commission and the relevant Council formations. The European Council may want to consider setting intermediate milestones towards achieving the targets set for 2020.

The Council stands ready to: (i) work further on the governance structure of the Europe 2020 Strategy; (ii) support the European Council, if requested, with the provision of strategic guidance, including for a possible Annual Economic Summit; (iii) play its full role in the proposed setup of macro-structural economic country surveillance under Europe 2020; (iv) develop and carry out macro-structural country surveillance, focusing on public finance issues, imbalances and potential growth drivers, taking full account of spillover effects.

Lastly, the Council emphasises the usefulness of carrying out a mid-term review of the Strategy in 2013/14.

2) Exit strategies: crisis-related measures in labour and product markets support :

Regarding temporary crisis-related sectoral support measures :

these should be phased out as quickly as possible given their relatively large budgetary costs and the risks that the continuation of supply side measures may hamper efficient resource allocation and hence distort competition and the functioning of the internal market; in view of recent Commission economic forecasts, no new short-term schemes should be introduced nor existing ones extended; where they have longer term objectives and are considered for extension, e.g., restructuring, greening or research and innovation, they should continue to be scrutinised under the relevant State Aid rules.

Regarding measures to ease financing constraints :

withdrawal of temporary schemes to ease financing constraints should depend on the capacity of financial institutions to supply adequate credit to the credit-worthy corporate sector and should be consistent with agreed principles for exit from support schemes in the financial sector and the end of the temporary state aid framework; continued careful monitoring is required to prevent the recovery from being hampered by undue credit supply constraints; SMEs may continue to be more limited in their access to finance than larger firms even as the recovery takes hold, which should be taken into account when deciding on the withdrawal of measures to address financing constraints given the central role that SMEs play in the restructuring of the economy.

Regarding temporary labour market support measures :

these should be gradually withdrawn when the recovery is secured. This withdrawal could begin with a benchmark of mid- 2010 for the EU as a whole, taking into account the historic lag before employment reacts positively to an upturn in economic activity; the precise timing of withdrawal should depend on the country-specific situation; the gradual phasing out of temporary labour market support measures should be accompanied where necessary by a strengthening of activation, training and other flexicurity policies to facilitate job reallocation and workers’ reskilling.

The Council considers that the too late withdrawal of measures may carry substantial costs in terms of locking in labour to declining activities, thereby preventing the necessary reallocation of resources, damaging future growth prospects, distorting competition and interfering with the functioning of the internal market. Temporary measures that increase the generosity and coverage of unemployment benefits and other income support should be phased out.

On the sequencing of exit strategies , the withdrawal of sectoral support schemes should be prioritised, followed by the withdrawal of labour market support measures when the recovery is secured, and the withdrawal of measures to ease financing constraints based on economic evidence and consistent with other agreed principles for exit strategies as noted above.

There is also a need to ensure that any permanent measures adopted during the crisis are supportive of long term growth and employment and consistent with fiscal consolidation strategies.

The Council therefore invites the Commission to conduct an assessment of the main structural reform challenges and existing bottlenecks facing Member States and report back in May in accordance with the timeline set out by the Europe 2020 strategy.

3) Follow-up to the UN’s Copenhagen Conference on Climate change as regards the financing of policies :

developed countries have committed themselves to providing resources approaching USD 30 billion in the period 2010-2012 , with a balanced allocation between adaptation and mitigation including REDD-plus and investments through international institutions, and with a special emphasis on the most vulnerable and least developed countries: the Council stresses the need to urgently mobilise and deploy this fast-start funding; the EU and its Member States' commitment to contribute EUR 2.4 billion annually over the period 2010-2012 : the Council calls on other parties to announce their fast start contributions. It underlines that the EU and its Member States are ready to present a preliminary state of play on these commitments at the UNFCCC session in Bonn (31 May – 11 June 2010) and submit EU-coordinated reports on the implementation of this commitment at the Cancún Climate Conference and thereafter on an annual basis and it encourages other contributors to do so as well; developed countries' commitment in the context of meaningful mitigation actions of developing countries and transparency on implementation, to a goal of mobilising jointly USD 100 billion a year by 2020 , coming from a wide variety of both public and private sources, to assist developing countries in fighting climate change. It welcomes the establishment by the United Nations Secretary General of an Advisory Group on Climate Change Financing to develop practical proposals on how to significantly scale up long-term financing for mitigation and adaptation strategies in developing countries. It underlines that the potential of innovative sources of finance and of market-based instruments in particular, including carbon markets, as well as leverage of private finance through public finance.

4) Priorities for the EU’s general budget for 2011 : the 2011 budgetary procedure will play a crucial role in the pursuit and development of the European Union's objectives and priorities and takes place in a very specific context due to two main factors: the consequences of the economic crisis will still impact on 2011; at the same time, the 2011 budgetary procedure is the first procedure under the Lisbon Treaty.

The Council recalls the importance of maintaining an overall budgetary discipline. The budget for 2011 should remain strictly within the limits fixed in the current 2007-2013 financial framework and sufficient margins should be left under all the ceilings of various headings and sub-headings of the financial framework, with the exception of sub-heading 1b, for the purpose of sound financial management and notably to cater for unforeseen circumstances.

The Council underlines the fact that the draft budget resented by the Commission is the starting point of the budgetary procedure and therefore it must set the tone for a realistic budgeting.

The Council identifies the following elements as crucial in preparing the budget for 2011:

competitiveness for growth and employment : the Council underlines the importance of measures contributing to economic recovery, notably in the field of research and innovation. Special attention should be given to the timely implementation of agreed measures in the context of the European Economic Recovery Plan; cohesion for growth and employment : the Council considers that payments from Structural Funds and the Cohesion Fund should be at cruising speed in 2010 and 2011. It urges the Commission and Member States to maintain this momentum in order to avoid recurrent under-implementation in this area; CAP expenditure : the Commission is invited to present realistic and clearly defined forecasts already in its DB and then in its "ad hoc" letter of amendment on agriculture, taking into account past implementation and foreseeable market prices evolution at European and international level. Particular attention should be given to ensuring that payment appropriations for expenditure related to rural development are accurate; citizenship, freedom, security and justice : the Council recalls the importance of allocating sufficient resources to EU policies such as immigration; external actions : the role of the European Union as a global player must be reaffirmed and that the budget for 2011 should have adequate means to match the Union's ambitions. In this respect, the Council stresses that sufficient margin under the ceiling of heading 4 is vital for the European Union, in order to enable it to provide for unexpected needs and crises in the most effective, flexible and rapid way. The Council recalls the importance of the setting up of the European External Action Service (EEAS), which should be guided by the principle of cost-efficiency aiming towards budget neutrality; administrative expenditure : the Council intends to continue to monitor and to improve EU institutions' effectiveness with a view to increasing administrative efficiency and stresses the crucial importance of redeployment of resources and reprioritisation. This is even more important in a situation where the Lisbon Treaty assigns new tasks to institutions. The Council reiterates the importance it attaches to the recruitment process in the context of enlargement and expects all institutions to take the necessary steps; the European Union's decentralised agencies : the Council reiterates the importance of keeping their funding under firm control, so as to provide for the real needs and to avoid over-budgeting. It expects the Commission to continue providing a comprehensive picture concerning decentralised agencies, including their building policy, in due time for the draft budget for 2011. Regarding executive agencies, the Council will continue to monitor closely their activities, financing and staffing.

The Council held an exchange of views on the European strategy for growth and jobs, with a view to preparing the Spring European Council of 25 and 26 March.

The new Commissioner for Employment and Social Affairs, László Andor, presented the Commission's Communication " Europe 2020: A European strategy for smart, sustainable and inclusive growth ". Ministers in general welcomed the Communication as a valuable basis for discussions with a view to the decisions to be taken on the new strategy which will follow the Lisbon strategy.

While most ministers were in agreement with the Commission's suggestion that the new strategy should concentrate on a limited number of priority objectives, some pointed out that more explicit sub-targets could better address the specific national situation. In particular, they welcomed the proposed EU-level target for employment according to which 75% of the population aged 20-64 should have a job by 2020. Many ministers stressed the importance of women's participation in the labour market if the EU was to meet this target and maximise economic growth.

A large number of ministers also emphasised the importance of finding the most effective ways of reducing the impact of unemployment on young people and the elderly. The importance of education, lifelong learning and vocational training was highlighted, and a number of ministers also noted the importance of job quality.

The need to strengthen efforts in the fight against poverty was also stressed. In this context, some ministers welcomed the proposed EU-level target (20 million fewer people should be at risk of poverty by 2020) as a strong signal of the EU commitment in the framework of the 2010 European year against poverty and social exclusion. Other ministers wondered if the EU target would be appropriate as it referred to relative, and not absolute, poverty. Several ministers warned that such a target could create disincentives to take up work if it were to be reached through redistributive policies.

Some ministers considered that the new EU-level targets should be supported with EU funds, such as the European Social Fund (ESF).

Many ministers agreed that strong governance mechanisms are required to monitor the implementation of the new strategy and that, the EPSCO Council should play a key role.

The presidency gave a summary of the debate which will be conveyed via Coreper 2 to the General Affairs Council on 22 March in preparation of the European Council.

The debate was based on the following documents:

the Commission's communication on the EU 2020 strategy, adopted on 3 March; the presidency background paper setting out its reflections in the light of the outcome of the informal meeting of ministers for Employment and Social Security on 28 and 29 January in Barcelona (doc. 6422/1/10 REV 1 ).; contributions from the Employment and the Social Protection.

The Council adopted the joint employment report 2009/2010 (doc. 6575/10 ) and the joint report on social protection and social inclusion 2010 (doc. 6323/10 ) and agreed to transmit them to the Spring European Council.

The joint employment report 2009/2010 gives an overview of the challenges which the employment policies of Member States face due to the need to adjust crisis measures within the framework of continuing structural reforms. It draws from the reports submitted by Member States on the implementation of the employment part of their national reform programmes. The joint employment report will be submitted to the European Council which, according to the Treaty, will consider the employment situation in the Union and adopts conclusions thereon, on the basis of a joint annual report by the Council and Commission.

The joint report on social protection and social inclusion 2010 calls for more effective social inclusion and social protection in line with the principles of access for all, adequacy and sustainability. It draws on Member States’ national reports on strategies for social inclusion, pensions, health care and long-term care which were submitted for the first time in an integrated form in 2006. The joint report notes that drawing on lessons of the crisis and of ten years of the Lisbon strategy there will be a need to foster sustainable growth along with job creation and social cohesion and systematically to assess progress of social outcomes.

The Council also took note of the Commission's report on Equality between women and men, 2010 . (doc. 5056/10 ). This report focuses, in particular, on gender equality and employment as a way to stimulate economic recovery and growth; the reconciliation of work and private life; promoting social inclusion through gender equality; and preventing and combating gender-based violence. The report will be forwarded to the Spring European Council.

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The Council examined an annotated draft agenda for the spring meeting of the European Council, to be held on 25 and 26 March.

The European Council is expected to focus on the following:

preparation of a new EU strategy for jobs and growth; and the follow-up to the UN conference on climate change in Copenhagen in December.

As regards jobs and growth , the European Council will be held to agree on the general framework of the Union's new strategy, on the basis of the Commission's communication on "Europe 2020". It will be called upon, in particular, to finalise the governance of the strategy and to agree on a limited number of quantitative targets. The European Council will also take stock of continuing efforts by the EU and Member States to tackle the economic crisis, and will hold a preliminary discussion on preparation of the next G-20 summit.

On climate change , the European Council will take stock of work on the follow-up to the Copenhagen conference, both as regards the international negotiation process and the Union's relations with its strategic partners.

The Council (General Affairs) will hold a further discussion at its meeting on 22 March, drawing on the work of the other Council configurations involved, in the run-up to the European Council.

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