B4-0731, 0747, 0750 and 0757/96

Resolution on the broad economic guidelines

The European Parliament,

- having regard to the conclusions of the Madrid European Council concerning Member States' adherence to the 1995 broad economic guidelines and the joint report by the Commission and the Council on employment trends and policies in the Member States,

- having regard to the Commission's Annual Economic Report for 1996 (COM(96)0086) and Parliament's resolution of 9 May 1996 thereon ((Minutes of that Sitting, Part II, Item 10.)),

- having regard to the Commission's recommendation on the broad economic guidelines for 1996 (COM(96)0211 - C4-0310/96),

- having regard to the conclusions of the Ecofin Council of 3 June 1996 on the Commission's recommendation with a view to the Florence European Council of 21-22 June 1996,

- having regard to the White Paper on Growth, Competitiveness and Employment,

- having regard to the Community's common employment strategy initiated at the Essen European Council and reissued subsequently at the Cannes and Madrid Councils,

A. whereas the EU economy experienced a weak annual GDP growth of 2.5% in 1995, with growth coming to a virtual standstill in the closing months of 1995 and latest growth predictions by the Commission having been revised downwards to a mere 1.5% for 1996, with expected growth rates of less than 1% in some Member States,

B. whereas unemployment in the EU has reached a historically high level of approximately 18 million people, with at least 50 million people suffering from social exclusion and poverty, and the latest figures indicating a further rise in unemployment in most Member States,

C. whereas internal demand in the EU is depressed given the consumer confidence crisis, fuelled by factors such as high levels of unemployment, perceived threats in some Member States to the future of social protection and real wages while, as indicated in the Annual Economic Report, high profitability levels have not translated into higher private investment or higher employment,

D. whereas public investment in the EU, as a share of GDP, has been gradually reduced from 3.5% on average at the beginning of the 1980s to less than 2.5% at present,

E. whereas the broad economic guidelines fail to address the underlying causes of depressed business and consumer confidence,

F. whereas, against this background, the key Community objectives of substantial unemployment reduction and successful transition to EMU on 1 January 1999 will be seriously jeopardised unless appropriate economic policy guidelines are recommended and implemented at European and national levels,

1. Whilst underlining the necessity of achieving EMU, and in particular the pressing need to achieve fiscal consolidation, considers the Council's approach to the 1996 broad economic guidelines to be an unrealistic and inadequate response to the current economic situation in the European Union;

2. Believes that the contribution of both monetary policy and structural policies needs to be spelt out much more clearly;

3. Regrets, in this respect, that the Commission and the Council have not deemed it necessary to take due account of Parliament's abovementioned resolution of 9 May 1996, ignoring many of the economic policy recommendations it contains;

4. Endorses the macro-economic framework set out in the EU Treaty, in particular the goals of appropriate price stability targets and exchange rate stability, sound public finances, competitiveness, employment and smooth functioning of the labour market; considers, however, that the approach chosen by the Commission and the Council is insufficient to meet the current economic challenges and calls, within this macro-economic framework, for:

- an appropriate policy-mix between a more accommodating monetary policy, aimed at boosting investment and consumption throughout the EU, and a policy of fiscal consolidation aimed at ensuring a successful transition to EMU on 1 January 1999, and in particular lower interest rates to mitigate the negative short-term effects of deficit reductions on growth,

- an approach to fiscal consolidation based on the need to ensure adequate levels of public investment aimed at lowering the cost of private investment, raising the labour-intensive growth potential in the long term and contributing to increased competitiveness in Europe,

- a relaxation of monetary policy, which is now possible,

- the full harnessing of the potential of the internal market in order to boost growth and internal demand, given in particular the relatively small share of extra-Community trade in the Community's consolidated GNP,

- a more realistic and balanced approach to the challenges and prospects of sustained economic development, instead of the current approach based on ¨wishful thinking' which, with its continuous downward revisions of economic forecasts, contributes to a build-up of mistrust among citizens and businesses as to the capacity of economic policy to influence real economic developments, thus worsening the already deeply-rooted confidence crisis with its negative effects on consumer and investment behaviour throughout the EU,

- the creation of an environment where employers in the European Union are encouraged to take on workers,

- an analysis of 'best practice¨ both within the 15 Member States and elsewhere (e.g. the USA) to identify the policy which can achieve results in bringing down unemployment,

- preparation of the transition towards a new 'model of development¨ as outlined in Chapter 10 of the White Paper on Growth, Competitiveness and Employment;

5. Considers that, irrespective of the criteria for the third stage of EMU, a stability-oriented medium-term policy will contribute to the long-term encouragement of investment, durable growth and the creation of jobs;

6. Regarding structural policies, calls on the Commission and the Council to implement and strengthen urgently, in the framework of the White Paper on Growth, Competitiveness and Employment and the preservation of the European Social Model, the Essen priorities for employment, in particular:

- education, training, life-long learning, the use of new technologies for employment and narrowing the gap between those having increased access to information and those being excluded,

- creation of new jobs in sectors corresponding to the new needs of our societies, in particular in the environmental and ecological sectors, and in our cities, ensuring a high level of qualification of the workers involved and safeguarding and renewing the services of common interest,

- a new organization of working time, including reduction of working time, promoting greater variety in working time, so as to reconcile the flexibility needed by industry and the new lifestyle of workers, to be based on negotiation between social partners;

7. Calls on the Council to apply the lessons of the Commission's Green Paper on Innovation (COM(95)0688 - C4-0609/95), taking into account Parliament's opinion of 6 June 1996 thereon ((Minutes of that Sitting, Part II, Item 7.)), which identifies the reasons for the failure of the European Union to innovate competitively;

8. Regrets the reluctance of most Member States to implement the broad guidelines in 1994 and 1995, especially in achieving the reduction of non- wage labour costs, particularly at the lower end of the wage scale;

9. Urges the Commission and the Council to recognize that a sound economic policy at European level depends on successful implementation by Member States of adequately designed broad economic guidelines, based on proper implementation of Member States' convergence programmes, and on effective coordination among Member States, to be achieved, if necessary, through the strengthening of the procedures laid down in Article 103 of the EC Treaty;

10. Urges the European Council meeting in Florence on 21 and 22 June 1996 and the subsequent Ecofin Council to reintegrate in the broad guidelines, with the objective of rendering them less inadequate to the current economic challenges, those key elements proposed by the Commission which have not been included in the version of the guidelines approved by the Ecofin Council meeting of 3 June 1996, for instance the reference to the opinion expressed by the European Parliament, the need for a better policy-mix and policy détente more favourable to growth and employment, the requirement for monetary policy to contribute, in line with Article 105(1) of the Treaty, to the achievement of the Community's objectives as defined in Article 2 of the Treaty, the appropriate design of Member States' convergence programmes also aiming at promoting growth and employment, or the realization of the Trans-European Network projects;

11. Considers it very important that the Irish presidency should present at Parliament's July part-session in Strasbourg the recommendation under Article 103(2) of the Treaty on the broad guidelines of the economic policies of the Member States and the Community, just as the Spanish presidency did in 1995;

12. Instructs its President to present this resolution in his statement to the European Council meeting in Florence on 21-22 June 1996;

13. Instructs its President to forward this resolution to the Council, the Commission and the parliaments of the Member States.