Growth, jobs top new European Commission agenda
Juncker Commission - Photo © European Union 2014 EP
(BRUSSELS) - Boosting growth, cutting near-record jobless queues and making member states stick to tough budget rules are just some of the tasks the new European Commission must quickly get to grips with.
The Commission, led by former Luxembourg prime minister Jean-Claude Juncker, formally takes office Saturday, with fixing the European Union's stalling economy the number one priority.
Juncker has promised a 300-billion-euro ($384 billion) investment package by the end of the year in response to calls, led by struggling France and Italy, to go for growth after years of austerity.
The challenges are enormous.
"The next few months are going to be really tough, with the Commission's latest economic forecasts, budget reviews during November and preparing the investment plan," Pierre Moscovici, former French finance minister and the new Commissioner for Economic Affairs, said recently.
On Tuesday, Moscovici will announce forecasts which are widely expected to show the European economy at risk of going backwards after a very modest recovery from the 2008 global financial crash and subsequent debt crisis.
A weak economy spells trouble, especially for struggling France, with Moscovici under pressure to show he can deal with the problems of his home country dispassionately and fully in line with European Union rules.
At least one problem has been eased -- a review of eurozone member state budgets last week cleared them all when Brussels had at one stage looked set to reject the French and Italian drafts.
Last minute changes brought them back into the fold but a continued review will likely see them called on to do more if they are to comply with the rules.
France says it will now meet the EU budget deficit target of 3.0 percent of Gross Domestic Product in 2017, not next year as had been agreed earlier with Brussels.
Paris will now have to convince Moscovici and his boss Juncker it is serious this time around.
For Juncker and the new Commission, the key test will be the investment package, getting it funded, agreed and most importantly of all, working over its planned 3-year life.
Champions of austerity such as Germany have been cool on the idea, believing that sound government finances are the only basis for sustained growth but they have come around enough to support the idea as long as member states do not take on more debt as a result.
France and Germany plan to meet in early December to discuss the plan, aiming to get it up and running even as doubts remain over where the crucial funding is going to come from.
Germany has made clear it is in no mood to sign a blank cheque and the balance between public and private sector commitments remains open.
- All eyes on 'Sleeping Beauty' -
Juncker insisted last week that the plan "could not be financed by bigger deficits," and called on the private sector to step up to the plate.
The one certainty is that the European Investment Bank, the EU's long-term investment arm will be heavily involved, leveraging up its funds to raise the money.
"The key must be the EIB but it will have to take real risks with real leverage" to raise funding on the markets, said one European diplomat of an institution some have dubbed "Sleeping Beauty" because of its perceived inactivity.
"A capital increase could serve to maximise the leverage," the diplomat said.
Final decisions on the package will go to a Dec 18-19 summit in Brussels when EU leaders will want to show they are doing everything possible to bring growth and jobs to voters who have grown sceptical the 28-member bloc can deliver what they need most.