EU agrees on economic recovery plan


Brussels : European Union (EU) leaders Friday agreed on what they described as an “ambitious” economic recovery plan but were still locked in discussions on how to meet their greenhouse gas emission targets.

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“We have agreed unanimously an ambitious stimulus package” designed to help the bloc weather recession, British Prime Minister Gordon Brown said during a break in the talks in Brussels.

A final text being discussed at a summit of EU heads of state and government was expected to say that member states and the European Commission should mobilize resources worth 200 billion euros ($265 billion), or around 1.5 percent of the bloc’s gross domestic product.

While the package’s approval was largely expected, diplomats had said ahead of the meeting that discussions would mostly revolve around whether the size of the stimulus should be worth “at least” or “around” 1.5 of GDP.

“The important thing is the agreement of a package of around 1.5 percent of GDP,” Brown said.

“In the last few weeks people said that Europe wouldn’t even agree to 1 percent – that’s a big advance in the discussion,” said Brown, who has championed a large injection of public spending in a bid to stave off a prolonged period of economic decline.

In a defeat for France, which chaired the meeting in Brussels, leaders struck out a reference to the fact that member states may be allowed to reduce their value-added tax on labour-intensive services and provide tax incentives for environmentally-friend products and services, diplomats said.

The stimulus package also envisages 30 billion euros in extra investments by the European Investment Bank over the next two years. The money will be used to finance small and medium-sized businesses, as well as to promote renewable energy and help carmakers develop cleaner cars.

Meanwhile, the commission is to speed up payments made from its budget to member states.

Discussions in Brussels were continuing over the bloc’s pledge to cuts its greenhouse gas emissions by 20 percent compared to their 1990 levels by 2020.

French President Nicolas Sarkozy, who is eager to come up with a deal by the end of the year, has tabled a final set of proposals that he hopes will be approved by the end of the day.

The talks focussed on how to enact such expensive cuts at a time of economic hardship, and on how to share the burden of making industry greener.

“I am confident that we will reach an agreement today, which should set an example for the rest of the world,” said Polish Foreign Minister Radoslaw Sikorski.