Will the EU really turn to growth?

It is considered progress that European Union leaders are discussing growth after two years of focusing almost exclusively on austerity, but actual growth strategies are still in short supply.

By Robert Marquand, Staff writer / January 31, 2012

A European Union Flag flies in Athens, on Monday, as the ancient Parthenon temple is seen in the background. European Union leaders are discussing growth after two years of focusing almost exclusively on austerity measures.

Petros Giannakouris/AP

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Paris

At the 17th summit by European Union leaders since the eurozone crisis began, the rallying cry and hope for the meeting boiled down to a single word: growth.

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For two years, EU leaders have agreed to and acted on austerity measures, slashing spending even as four governments fell, unemployment rates rose, and the EU distributed bailout funds.

But despite the urging of EU policies by business and world leaders at the annual Davos economic summit last week, the 27 EU leaders agreed to few potent stimulus actions yesterday. They approved a “fiscal unity” pact that will open the door to sanctions for EU states that take on too much debt, but it was difficult to find significant policies that satisfied the call for growth, experts say.

Still, that growth talk has joined austerity as part of the discourse of the eurozone crisis, and is seen as one remedy for it, may be a short-term consolation for stimulus advocates.

As EU leaders left the Brussels summit, they certainly talked the talk of growth, but analysts worry that under the German-driven set of solutions, there has been little actual movement towards it.

Danish Prime Minister Helle Thorning-Schmidt said afterwards, "It's very important that we don't forget the growth and the jobs. Everything starts and ends with growth and jobs.” Luxembourg’s President Jean-Claude Juncker offered that, "It is about employment. We have to learn to explain that it's not just about the consolidation of our finances, but we also need the prospect of growth." Austria's Chancellor Werner Faymann opined that “We now also have to talk about growth. We have to make savings, everybody knows this…. But the big is question is how to tackle employment. If we don't massively campaign for sustainable growth then we are missing a pillar.”

Even Britain’s David Cameron showed up with a growth package proposal.

The most substantial growth idea that emerged yesterday is a proposal by Jose Manuel Barroso, president of the European Commission, to dedicate up to 82 billion euros ($107 billion) to stimulate employment and small businesses with money leftover from EU discretionary budgets dating to 2007. But few specifics were given after the summit broke up late last night, and the policy community and financial sector downplayed Mr. Barroso's idea.